Things You Need to Know About Bear Markets

26 Dec
Bull vs Bear Market Gold

Things You Need to Know About Bear Markets

Gold Market Discussion

About Bear Markets

Here are a few things you need to know about bear stock markets, some bullet points from CNBC:

  • A “bear market” is when stocks see a 20 percent decline or more from a recent high — but they’re also marked by overall pessimism on Wall Street.
  • Since World War II, bear markets have lasted 13 months on average, and stock markets tend to lose 30.4 percent of their value.
  • During those conditions it usually takes stocks an average 22 months to recover, according to analysis from Goldman Sachs and CNBC

Those are averages.  But just as successive financial crisis in our era have been deeper than the ones before, successive bear markets have grown worse.  (Note that the 2008 Great Recession was much more painful that the Crash pf 2000-2001.)  It is because the manipulation and malinvestment that causes these conditions goes uncorrected, the scale of our serial crises grows.  

One of the ways financial crises announce themselves is with volatility, and in fact turbulence has been the key to our markets during this period. So, if you will forgive me, I’d like to quote myself from this blog back in October:

“Sometimes, in the face of a stock market sell-off, powerful forces will be put to work trying to stem the tide:  central bank operations, guidance about future policies, plunge protection team money shuffling.”

“Remember that all such interventions only make the ultimate problem worse.  With each new manipulation, the money we use becomes less resilient, and less reliable.  And in fact, nothing can stop economic reality from eventually asserting itself.”(October 25, 2018)

One other point for those of you who are technically minded.  Gold has been above its 50- day moving average since November.  It has now moved decisively above its 200-day moving average.  That is usually a very bullish indicator.