This is very important. Bear markets start very calmly. They just rollover slowly. Bear markets do not start with crashes. I think the action today is a microcosm for what tops look like. I am not calling a top because that is not my strong suit.
The next time a bear market starts, whether that's today or sometime in the future, the declines will start out to be very manageable.
This chart is the first six months after the peak of the S+P 500 in 2000. The market gave investors plenty of time to slowly reduce exposure as the market flirted with its 200 DMA several times before going below it for good in October of that year.
The magnitude of the next bear will probably be different but I think the way it looks on the chart for the first few months will be very similar.
3 comments:
Roger -- it seems to me that you've slowly (like that chart) gotten more and more bearish over the last couple of months..., that you were fairly upbeat as late as November. I missed the turn, I guess. Am I right, or am I misreading (or mis-remembering) your views here?
AT,
I have felt that 2006 would be a down year for months. I expected more out of the fall rally than what we ended up getting.
Hey Roger -- lets talk portfolio tilting to buy market downturn insurance.
Assuming a mild recession somewhere over the near term horizon. What do you think offsetting market exposure (i.e. S&P 500) with long bonds (i.e. American Century Target Maturity 2020) instead of using a reverse index fund?
OG
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