Is the stock market ‘recalibration’ finished?

Over the last month or so financial commentators in Australia have been discussing the recent ‘recalibration’ of the Australian stock market. I love how it is no longer a ‘correction’ or an ‘adjustment’. All of sudden it is a recalibration. Just exactly what the difference between a correction, adjustment, or recalibration is I am not sure. But it comes across as though a recalibration is not that bad really when measured against a correction or adjustment. Which is a bit hard to understand, because no matter how you name it everyone with money in the market—which is basically everyone when you consider we all have some kind of superannuation—has been impacted by the 16 percent downturn in the markets since April last year.

These days they talk about the recalibration almost as if they knew it was coming and when it was going to happen; which they obviously didn’t. But it is convenient, now that is has happened, to kind of make out that they knew all about it.

But what I have been trying to work out over the last week or so is: Has this recalibration of the market finished? Is it over. Are we back to normal now?

As you might expect there are financial experts on both sides. Many of these money soothsayers are indicating that the market recalibration is over and the rest of 2016 will see the market go back to healthy levels. But I would have to say that the weighting is currently on the other side with those that are suggesting the market has further to fall and that the actual recalibration level is closer to 4,500 points for the ASX200. If these forecasters have it right, then the market will continue its recalibration through 2016 and will end the year another 10 percent lower than it is now.

I very much hope that the first group of analysts have it right and the market is back on the way up. I have already seen a significant chunk of my superannuation wiped off and losing another 10 percent would likely cause me to increase my weekly red wine allowance.