Markets

How Does This Bear Compare to Others?

The White House proclaimed it does not believe the U.S. economy is in danger of a double dip recession, but the stock market seems to disagree. Stocks (NYSEArca: DIA) have been on a nine-day temper tantrum, swiftly eliminating their year-to-date gains.

Even though U.S. stocks (NYSEArca: VTI) barely escaped the dubious 1978 record of nine consecutive days of market losses, the S&P 500 (NYSEArca: SPY) in that much time has declined almost 9%. And if this keeps up, Wall Street Big Wigs could be forced to return early from their summer vacations in the Hamptons, which would create a huge inconvenience.

Bear Market or Bull? (Part I)

While there are various opinions about what qualifies as a bear market, one widely used definition is a price decline of 20% or more over at least a two-month period. By that measure, we're not yet there, but getting uncomfortably close.

What's been influencing the move in stocks as of late? The market has been flooded with a wave of bad economic news (weak GDP, weak manufacturing, weak consumer spending, weak job market, etc.) and instability from Europe's (NYSEArca: VGK) ongoing sovereign debt crisis. The U.S. government's (NYSEArca: IEF) own struggle with too much debt is also worrisome.

Bear Market or Bull? (Part II)

Despite the previously mentioned sour grapes, many of Wall Street's leading investment strategists still view the current situation as a bull market. Are they insane? The unapologetic answer is yes, simply because neither the economy nor the stock market has been a self-sustaining machine since March 2009. (Hey, wasn't that around the same time major stock indexes touched decade lows? Give yourself two brownie points if you answered 'yes.') Lest I remind you it was also at that time when the Federal Reserve unleashed a multi-billion buying spree of toxic mortgage assets to 'save' thefinancial system as we know it.

mortgage bondsHistory of Bear Markets Over the Past 50 Years

Time Period Duration (Months) Percentage Decline
Aug. 1956 - Oct. 1957 14.7 -21.6%
Dec. 1961 - Jun. 1962 6.4 -28.0%
Feb. 1966 - Oct. 1966 7.9 -22.2%
Nov. 1968 - May 1970 17.9 -36-1%
Jan. 1973 - Oct. 1974 20.7 -48.2%
Sep. 1976 - Mar. 1978 17.5 -19.4%
Jan. 1981 - Aug. 1982 19.2 -25.8%
Aug. 1987 - Dec. 1987 3.3 -33.5%
Jul. 1990 - Oct. 1990 2.9 -19.9%
Mar. 2000 - Oct. 2002 30.5 -49.1%
Oct. 2007 - Mar. 2009 17.0 -54.0%
2011 - ? ? ?
What's Your Strategy?

If your money is performing the same or worse than the market and it doesn't bother you, I deeply admire you for your resilience to financial pain. For the rest of us, having a logical, well-devised investment plan is essential. Shouldn't the right mix of investment assets produce visibly good results?

Since the beginning of the year, ETFguide's self-managed ETF Portfolios have climbed between 4-6% in value, while aiming for lower risk compared to an all stock portfolio. What's the point? It proves that good investment results are achievable, even during the toughest of times.

In summary, I'll leave the arguing of whether we are in a bull market or a bear up to Wall Street's leading men and women - because they know best. The only thing I want you to remember is that genuine bull markets don't require the generous support of federal intervention.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ETFs

Latest Markets Videos