For clients of Erick Conway, please see CLICK HERE to see important details related to the Strong Valley transition.
Call Our Office
(559) 384-2900 | Fresno
(619) 480-1413 | San Diego
Your Money
Your Life
Your Way
Article

The NASDAQ Bear Woke Up Angry

The NASDAQ Bear Woke Up Angry

Bear markets happen. Bull markets happen. And do you think you can figure out when the market is turning – either up or down and trade accordingly? Well, before you think that you should get out of this market now and wait this bear out, here’s some things you might consider.

March 29, 2022
The NASDAQ Bear Woke Up Angry
Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

Bear markets happen. Bull markets happen. Just stick to your financial plan, and stay calm and disciplined. When the market sours or slumps, don’t believe talk that this time it is different. It is not.

History shows this is true. Here is a simple chart of the performance of NASDAQ for the 20-years ending March 7, 2022 (NASDAQ officially entered bear market territory on this day). This covers the decline and recovery from the last U.S. recession as well as the last bear market (the COVID-bear).

NASDAQ Over 20-Years

What does this chart show? When markets decline, they do so rapidly and painfully. The subsequent recovery is slow and uneven.

But it does inevitably happen. If you take the longer 20-year view of this chart, it’s clear that markets grow past previous highs after a dip.

Bears & Bulls – By the Numbers

Although the S&P 500 is not yet in a bear market, since it is “only” off 12% YTD and a bear market is defined as being off at least 20%, let’s examine historical bear markets as measured by the S&P 500.

There have been 26 bear markets and 27 bull markets in the S&P 500 Index since 1928. In addition:

  • Stocks lose 36% on average in a bear market.
  • Stocks gain 114% on average in a bull market. 
  • The average length of a bear market is 289 days (9.6 months)
  • The average length of a bull market is 991 days (2.7 years)
  • Since 1928, we have seen 20.6 years of bear markets – stocks have risen the other 73.4 years (that’s 78% of the time)

 

You Won’t Get the Timing Right

Think you can figure out when the market is turning – either up or down and trade accordingly? Well, before you think that you should get out of the market now and wait this bear out, consider this:

  • Half of the S&P 500 Index’s strongest days in the last 20 years occurred during a bear market. 
  • 34% of the market’s best days took place in the first two months of a bull market – before it was clear a bull market had begun.

In other words, the best way to weather a downturn could be to stay invested since it’s difficult to time the market’s recovery.

Stick to Your Plan

There are no investment strategies that give you the market’s ups and help you avoid the downs, save for luck.  Fear and greed are irrational emotions that easily lead to bankruptcy if they influence your investment decisions.

Of course, it is hard to stay patient and hold when Wall Street analysts, investment gurus and financial TV pundits spout endless gloom and doom at the troughs and exuberant optimism at market peaks. Short-term thinking like this only guides you to do the wrong things at the wrong time.

This is why it helps to work with an advisor – someone to cool your head when irrational exuberance strikes, and convince you to stick to your plan in the face of uncertainty.

Although it can be difficult to watch your portfolio dip with the market, it’s important to keep in mind that downturns have always been a temporary part of the process.

No matter what the markets are doing, assure yourself that this time is not different.

Other content you may like

  • Keeping Emotions and Investing Separate

    Keeping Emotions and Investing Separate

    August 4, 2023
    Reducing your emotions can give you a better chance for investing success. For many investors this may seem almost impossible to do. This article gives you four tips on how to keep your emotions and investing separate.
    Read this Article
  • Keeping Sight of Personal Priorities

    Keeping Sight of Personal Priorities

    September 11, 2022
    Many business owners become so engrossed in company operations they inadvertently neglect their personal finances and their own personal priorities and goals. This article explains ways that you can develop strategies with your financial advisor that will help strengthen your personal finances, which can change over time with the growth of your company.
    Read this Article
  • Living Beyond Your Means

    Living Beyond Your Means

    October 31, 2022
    Living beyond your means won’t bring happiness or satisfaction. It’s a common problem in our culture because we are bombarded by endless advertising encouraging consumption. Even financially successful people struggle with a sense of scarcity. If you feel that no matter how much money you earn is never enough, how do you make a plan? This article gives tips on how to face your financial fears.
    Read this Article
  • Talking to Your Kids about Your Finances

    Talking to Your Kids about Your Finances

    September 20, 2023
    Communicating openly can help everyone prepare and plan for the future. This isn’t always as easy as it sounds. Many parents find it uncomfortable and are overwhelmed with where to start. Yet often, just discussing and thoughtful planning gives your whole family a sense of relief. Here are some tips to help you gather pertinent information and get the talking headed in the right direction.
    Read this Article
  • The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.
    phone-handset