Investing With IBD Ep. 337 Here’s How To Categorize Corrections — And Why Doing So Helps Set Expectations
Sep 10, 2025
Eric Krull, founder of Krull Asset Management and co-author of "The Lifecycle Trade," shares his expertise on market dynamics and corrections. He categorizes market rallies and discusses the importance of risk management and patience, especially when considering IPOs like Klarna. Krull emphasizes recognizing support levels and strategic buying opportunities post-pullback. He also delves into the psychological aspects of investing during volatile periods, advocating for data-driven approaches to navigate market fluctuations.
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Classifying Rallies With The 15-15 Rule
- Rallies after follow-through days fall into four practical categories: whipsaws, slogs, moneymakers, and life-changers.
- The 15-day and 15% rules (15-15) help separate tiny bounces from rallies that produce big individual-stock gains.
Follow-Through Success Rate Is About One-Third
- Historically about one-third of follow-through days lead to meaningful rallies and two-thirds produce little or no gain.
- Successful follow-throughs can still deliver outsized individual-stock returns even when index gains look modest.
Plot New Rallies Against Historical Lines
- Plot a rally versus historical average lines after a follow-through day to judge its strength.
- Use that comparison to scale how aggressively you add to positions as the rally shapes up.
