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How to Rake in the Money in a Stock Market Correction

Gena Vazquez
New York Voice
Published in
4 min readDec 30, 2024

A stock market correction, typically defined as a decline of 10–20% from recent highs, can be a nerve-wracking time for novice investors. However, it also presents unique and Bonafide opportunities to make money. Here are some strategies to play in a market correction profitably.

1. Identify Undervalued Stocks

Corrections often cause indiscriminate selling, pushing even high-quality stocks to bargain prices. Look for companies with strong fundamentals, such as consistent earnings, solid cash flow, strong dividends, and competitive advantages, that are now trading at a discount. Tools like price-to-earnings (P/E) ratios and price-to-book (P/B) ratios can help identify bargains.

Example:

If a blue-chip stock with a historically stable P/E ratio of 20 drops to 15 during a correction, it might signal a buying opportunity.

2. Invest in Defensive Sectors

Defensive sectors, such as healthcare, utilities, and consumer staples, tend to perform better during downturns. Companies in these industries provide essential goods and services, making their revenues more stable regardless of economic conditions. You just can’t go wrong with investing in companies which provide basic needs.

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New York Voice
New York Voice

Published in New York Voice

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Gena Vazquez
Gena Vazquez

Written by Gena Vazquez

Writer | Private Equity Investor - Silicon Valley to Hollywood and Wall St. in between. In love with nature. You'll find me beachside most days.

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