The Path by Peter Mallouk

Author:Peter Mallouk [Mallouk, Peter]
Language: eng
Format: epub
ISBN: 9781642937022
Publisher: Post Hill Press
Published: 2020-08-06T13:17:02+00:00

BEAR MARKETS

If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.

JOHN BOGLE

Bear markets don’t happen nearly as often as corrections, but they also happen all the time. A bear market is defined as a market drop of 20% or more, and they typically occur every three to five years. All told, there have been 35 bear markets since 1900, with only 15 since 1946.62 The four most recent bear markets have reflected a number of crises, including a terrorist event, an economic meltdown, a European debt crisis, the obligatory oil crisis that happens every decade or so63, and a global pandemic. The average decline in a bear market is 33%, and more than a third of bear markets drop over 40%. On average, a bear market lasts close to a year, with nearly all of them lasting between 8 and 24 months. Bear markets are frequent, and equally as frequently, they go away!

IT’S EXACTLY THE SAME, BUT DIFFERENT

The four most dangerous words in investing are “This time it’s different.”

JOHN TEMPLETON

If we know that every bear market eventually becomes a bull market, then why do people panic and go to cash? The answer is that while bear markets tend to be caused by an event that creates an immediate and dramatic shock to the fundamentals of the market, the events that create these shocks tend not to be the same.

What makes a free market economy work is the ability of suppliers to freely move their goods and services to meet the demand of those who need them. When these two forces are in balance, the market is said to be in equilibrium.64 These same forces help determine the price of stocks and pretty much anything else that is bought and sold around the globe.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.