We are deeply in the bear market right now and the Market God will do a lot of fooling around to trap people in either direction. Here is the current status of the bear market we are experiencing.
Are we done with it? Think about some extreme bear markets in history:
- A negative 89% bear market and a 25-year sideways market followed the September 1929 Dow Jones Industrial Average mega-bubble peak.
- A negative 78% bear market and a 15-year sideways market followed the March 2000 Nasdaq mega-bubble peak.
- A negative 76% bear market and a still ongoing 33-year sideways market has followed the December 1989 mega-bubble peak in the Japanese stock market.
Actually, a bear market during a recession in generally more devastating than others:
"There are three principal phases of a bear market: the first represents the abandonment of the hopes upon which stocks were purchased at inflated prices; the second reflects selling due to decreased business and earnings, and the third is caused by distress selling of sound securities, regardless of their value, by those who must find a cash market for at least a portion of their assets." Robert Rhea
Per this definition, I think we are just in the 2nd phase and a more painful and miserable wash-out phase will likely come in the months ahead.
A silver lining: there is increasing evidence suggesting that the GOP will not only control the House following the midterm election, but also the Senate. If that's the case, the fake government under the metntally diabled Biden will not be able to do further harm to the economy, which will likely be a positive for the market. Maybe that will shorten the bear market course and lessen the magnitude of the washout at the final phase. So do vote for the GOP for the sake of your 401K or your wealth in general!!
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