Let’s define it. A bear market is a drop in the market of at least twenty percent from its highs, lasting at least two months. Think 2008. In fact, there have been 32 bear markets since 1900, or one every 3.5 years, on average1.
So, when’s the next one? Definitely, without a doubt, sometime in the future. We guarantee it.
Of course, we are being facetious. If you are reading this, you are either a client, or an acquaintance who has read a few of our posts. Either way, you know that bear markets, bull markets, and everything in between are absolutely unpredictable. How do we know? It’s not our opinion. It’s because the data and the evidence say so.
We’re sure we’re not alone in wishing the market was predictable. Luckily, predictability is not a prerequisite for success. Since 1900, the market has returned an average of about 10%. How do you make that work for you? Keep your costs low, diversify, stop predicting anything, and use what science and academia have taught us (in a nutshell, the “evidence-based approach). That’s the game plan.
And when the bear market arrives, do nothing different. Remember, its arrival and departure are unpredictable. Furthermore, if anyone tries to convince you that they know when the next bear market is coming, ignore it. It’s just a bunch of bull about a bear.
John & Bill
1 Ned Davis Research