- We are in a once in a lifetime bear market. Since 1825 this is the only second time market has fallen so much. You can look at it as a big problem or big opportunity. If you hold your nerves and preserve capital, you may have one of the biggest booms coming few years down the line.
- I have been reading the book Anatomy of the Bear: Lessons from Wall Street's Four Great Bottoms
. In 1931 the market dropped 43%. 1932 was a very interesting year with stomach churning moves. | Year | Return |
|---|
| 1926 | 11.62% |
| 1927 | 37.49% |
| 1928 | 43.61% |
| 1929 | -8.42% |
| 1930 | -24.90% |
| 1931 | -43.34% |
| 1932 | -8.19% |
| 1933 | 53.99% |
| 1934 | -1.44% |
| 1935 | 47.67% |
| 1936 | 33.92% |
| 1937 | -35.03% |
| 1938 | 31.12% |
| | |
- The 8 % drop in 1932 does not show you the drama behind the move. The market dropped 57% before recovering complete move. Everyone talks about the 1932 drop of 43%, but no one talks about the 33% plus gains in 1933, 1935 and 1936. It is human nature to focus on bearish periods and misery.
good point. In a lot of ways, the surest bet is on volatility. It would not be surprising if this is a multi-year bear market to see a positive move this year or next year only to see it to collapse again a few years from now.
ReplyDeleteSunday Night Coffee post is up - Analysis of the Market for the Coming Week - http://chartsandcoffee.blogspot.com/2009/02/sunday-night-coffee-22209.html