Correction pros

Corrections bode well for investors longer term, says Ann Miletti, a lead equity portfolio manager at Wells Fargo Asset Management, who says this downturn could push prices 15% lower.

Big sell- offs turn pricey stock markets into less expensive ones. “Corrections keep valuations in check,” Miletti says.

The market’s price- to- earnings ratio has dropped from 18.7 times the S& P 500’ s expected earnings at the January market peak to 16.4 after Thursday’s rout, according to Thomson Reuters.

While the S& P 500 is only about halfway to a bear market, 96 of those 500 stocks were down more than 20% from their highs as of Thursday’s close, according to FactSet data.

“The timing may not be bad,” Miletti says. “If you didn’t invest in your401( k) last year, youmay be getting the chance to do it at a discount.”

The main negative of a correction is that 401( k) investors see a decline in their account balances.

Headlines about plunging markets, however, don’t necessarily add up to losses in 401( k) portfolios that are as large as one might fear. For example, while the market is down8.8% fromits late January record after Friday’s rally, it is off just 2% from the beginning of the year.