JUN · ISSUE 26 · June 27, 2026
CONCEPTCorrection vs crash
The -10% that scares everyone and is, in fact, a normal part of investing.
PULLBACK
-5%
normal noise
CORRECTION
-10%
healthy, frequent
BEAR
-20%
regime change
THE IDEA
-10%
threshold of a correction
A correction is a drop of around 10% from a recent high. It is not a market failure: it is how the market sheds excess optimism and resets prices. On average, it happens almost once a year.
JUN · ISSUE 26
THE THRESHOLDThe number that defines a correction
-10%
from a recent high
Below -10% we call it a correction. From -20%, a bear market. A crash is something else: not magnitude, but speed.
Naming the drop keeps a normal dip from feeling like the end of the world.
- CORRECTION
- — A drop of around 10% from a recent high.
- BEAR MARKET
- — A drop of 20% or more: a shift in the underlying trend.
JUN · ISSUE 26
PRINCIPLECalm is not the normal state
“Corrections are not the problem to avoid, they are the toll you pay for being invested. The costly mistake is selling them in a panic.”
Whoever understands that -10% is frequent stops selling at exactly the worst moment.
- TOLL
- — An unavoidable cost of a process: here, the volatility of investing.
- PANIC SELLING
- — Unwinding positions out of fear, usually near the bottom.
JUN · ISSUE 26
WHAT IT LOOKS LIKEA correction inside an uptrend
Illustrative example: price rises, corrects 10%, then resumes the trend to a new high. The correction is a step, not the end.
Seen on the long chart, the -10% that terrifies in real time is just a small notch.
- TREND
- — The underlying direction of price over time.
- ILLUSTRATIVE
- — An invented example to explain, not real market data.
JUN · ISSUE 26
THE LADDERPullback, correction, bear, crash
Pullback (-5%)
A breather within the trend. So frequent it is barely news. Part of the normal noise.
Correction (-10%)
Deeper, but healthy: it clears excess optimism. On average, it happens almost once a year.
Bear market (-20%)
A regime change: the backdrop shifts, not just the mood. Usually comes with real economic deterioration.
Crash
Defined not by magnitude but by speed: a violent drop over days. Rare, memorable, and almost always followed by a bounce.
Four words people use as synonyms that mean very different things.
- REGIME
- — The market's underlying environment: bull, bear or sideways.
- BOUNCE
- — A recovery in price after a sharp fall.
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WHAT IT DOESWhat a correction does for you
Illustrative split of functions. A correction is not just pain: it does useful work under the hood.
Seeing what a drop is for flips the mindset from flee to prepared.
- VALUATION
- — How expensive or cheap a stock is against its earnings.
- ENTRY POINT
- — A more attractive price to buy after a drop.
JUN · ISSUE 26
EXAMPLESThe ladder, in numbers
| EXAMPLE A | -6% | ▼ pullback | Normal noise · illustrative |
| EXAMPLE B | -11% | ▼ correction | Healthy, frequent · illustrative |
| EXAMPLE C | -22% | ▼ bear | Regime change · illustrative |
| EXAMPLE D | +18% | ▲ recovers | After the bottom · illustrative |
Illustrative figures to lock in the idea: the same word changes with how much it falls.
- ILLUSTRATIVE
- — An example figure to teach, not a real asset or data point.
- BOTTOM
- — The lowest point of a fall before the recovery.
JUN · ISSUE 26
RONFYLess panic, more context
Next time you see a -10%:
Ask yourself whether it is a correction or a crash before reacting. It is almost always the first, and it almost always passes.
Daily briefing · @ronfy_official
Daily briefing · Mon-Fri 16:00 ET
- CONTEXT
- — Understanding a drop within its history, not isolated and in the heat of the moment.
- VOLATILITY
- — How much and how fast price moves up and down.