Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0
After the S&P 500 and NASDAQ Composite clipped the -20% mark that is the minimum for a Bear Market, the DOW exploded some 1,000+ points yesterday, a record point gain. So, is the Bear Market over? Given the high level of volatility, which actually rose during the record gain, I judge "NO!". Remember, the prior record gain was in a similar circumstance during October 2008, the market have slid badly the week before. While that was the start of a rally, it was nothing more than a counter-trend rally in continuing Bear Market. the bottom some 5 months away and much lower. So, while the market is bobbing around like a cork, do not be deceived, we are still in a Bear Market with lower lows worth patiently waiting for.

Sectors known to OUTPERFORM the typical Bear Market: Utilities (Electric, Gas, Water, and Telephone, although the latter are erroneously categorized as Industrials), Consumer Non-Durables, Consumer Staples, given Keansian stimulus Government spending (Defense Contractors and Healthcare, esp. Pharmaceuticals) and Gold, and oftentimes sectors NOT cyclical to the economy (Agriculture and Energy if given a sufficiently low price for Crude Oil). Sectors that typically UNDERPERFORM a Bear Market: Consumer Durables (such as Automobiles), Travel (Airlines, Rental Cars, Hotels and Casinos), Capital Equipment (such as Machine Tools), Freight (such as Trucking), things high on the Maslow Scale (such as Yachts and Powerboat Engines and Jewelers), and most especially high valuation stocks, as a Bear Market is more about valuation than any other single thing.

Remember: "The trend is your friend". In a Bull Market, you can pretty much assume we are still in a Bear Market until clear evidence shows otherwise. And same with a Bear Market. So, for right now, if you're NOT sure where we're at, we are still in a Bear Market.

Good Fortune, and Happy New Year!
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.