EDITOR NOTE: Investor sentiment these days seems to reflect what social media celebrity Dave Portnoy has been saying, that “stocks only go up.” If you’ve lived long enough, you’ve likely heard variations of this theme many times before. You’ve probably also seen what most investors tend to do, which is buy at record highs and sell at record lows in an attempt to “time” the market. As you might guess, none of it worked out that well, and most investors underperform the S&P 500. The best way to survive a bear market is, first of all, to embrace it for what it is, a thing that mauls foolish or overleveraged investors (versus a harmless teddy bear market), and to ride it by scooping up what’s left by those who feel its gash and bite, and occupying higher ground by diversifying your assets into physical gold and silver, giving you the ability to make prudent investment decisions from a sound distance while holding money that’s equally sound, safe, and robust.
Bear markets haven’t gone extinct. They’ve evolved into teddy bears.
That’s what some investors seem to believe—and who can blame them? The stock market used to take years, sometimes decades, to recover its prior peak after the start of a bear-market decline. After last year’s 34% meltdown, however, stocks regained record highs in only 126 trading days.
With the exception of a 100-day rebound after an interim drop in early 2009, that’s the fastest-ever recovery to a prior peak. The S&P 500 has fallen at least 20%—the conventional definition of a bear market—26 times in the past nine decades, according to Dow Jones Market Data. Recoveries to previous highs have typically taken almost three years, often much longer.
Nobody likes losing money and waiting for ages to get it back. Then again, that kind of pain can be a blessing in disguise, by chastening investors who otherwise might take risks they ought to avoid.
Just look at a sample of more than 2,000 investors that the Vanguard Group has been surveying regularly since early 2017. Among other questions, Vanguard asks how likely the U.S. stock market is to lose at least 30% over the next year.
Read more on WSJ