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Author: BGPenhollo Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74792  
Subject: Re: Longest bear market Date: 7/14/2000 1:52 PM
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Pixy posted...

"I think that's a matter of definition and semantics mostly to be found in the eyes of the beholder. Most financial analysts count the decline from August 25, 1987 to December 4, 1987 as a bear while some do say its a correction. During that period the S&P 500 index dropped from 336.77 to its low of 223.92, a drop of 33.5%. It did not again regain its peak until it hit 338.05 on July 26, 1989. To me, that's a bear."

Hi Pixy,

I think there are several concerns/issues here and the differences and the importance of those difference is what I would like to address.

Bear Market, correction, or time to reach previous peak value are all a bit different.

For those of us still working and investing, the time from peak to return is of little interest because we are still investing on the fall and the rise. Dollar cost averaging helps us in bear to bull cycle.

Those already retired should be much more concerned on the length from last peak to return to peak. This is the time period when they will be eating principle unless they have more than sufficient 'safe' money ot outlast the peak to return to peak.

I am not sure you remember your portfolio back from August 25, 1987 to July 26, 1989. I recall mine and I can say because I was still investing, the value of my portfolio was worth a LOT more in 1989 even though I lost quite a bit in 1987. (I even admit to pulling out quite a bit pretty close to the bottom - a lesson I think I have learned not to repeat.)

In fact, The value exceeded my investment by a considerable amount but the rate of return was not what I had wanted. Of course the next 10 years has made up for it in spades.

As an investor adding money to the portfolio the time from peak to returning peak is not something I worry much about. It part of life.

I would like to hear what those who are retired did in 1987 - or maybe what they did not do but think they should have done. What can we learn and are there means to negate or reduce the impact of a bear market and time to return of old peak??

BGP

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