Tag Archives: Bear Market

Should We Be Alarmed?

Suppose somebody came up to you and shouted: “I have terrible news about the economy.  I think you should sell your stocks!”

Alarmed, you say: “Oh, my God.  Tell me more!”

And this mysterious stranger shouts: “Run for the hills!  The American economy just added 200,000 more jobs—more than expectations—and the U.S. jobless rate now stands at 4.1%, the lowest since 2000!”

You blink your eyes.  So?

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“Bearing” in Mind

One of the oddities of a significant bull market—and this one we’re in today qualifies, as the second-longest in modern American history—is that they tend to go on longer than you might expect from the pure market fundamentals.  The last leg of a bull market tends to be driven by psychology; people have recently experienced an up market, and so they tend to expect more of the same.  They buy at prices they would never consider buying at when the markets have experienced a downturn, driving prices ever higher without regard to the price.  As a result, the long tail of the bull market will also see some of the greatest, fastest increases.

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The Challenges of Capturing Bull Market Returns

You probably didn’t notice, but Monday, September 11 marked a milestone: the S&P 500 index’s bull market became the second-longest and the second-best performing in the modern economic era. Stock prices are up 270% from their low point after the Great Recession in March 2009—up 340% if you include dividends. That beats the 267% gain that investors experienced from June 1949 to August 1956. (The raging bull that lasted from October 1990 to March 2000 is still the winningest ever, and may never be topped.)

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