“Bear markets happen because people are selling their stocks.”
-Michael Batnick
For good reason, there has been a lot of focus on the markets the last couple of weeks; volatility has picked up, larger sell-offs have been seen, beloved companies have been hammered, and the gains for the year have been erased in the U.S. markets in a short period of time.
If the selling should continue, you can bet there will be more talk about bear markets, recessions, and financial Armageddon (mainly from the doomsayers).
My friends at Ritholtz Wealth Management put out a great video that discusses bear markets and the data they discuss does a good job putting some perspective on market selling, the frequency of bear markets, and why “bear markets suck”. Pay attention to the difference between the up and down days in a bull market versus a bear market.
We can’t predict or prevent bear markets, but we can control our emotions as investors. I believe data can help us stay disciplined whenever the next bear market occurs, and there is a lot of great data here. I’ve also included a link to Michael’s post that they mention in the video.
I would have loved to have written a post covering all of this myself, but why reinvent the wheel?
The Irrelevant Investor: Higher Highs And Lower Lows
Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining to your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimer page.
