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We’re officially in a Bear Market – so what does that mean?
A wacky sense of humour led me to Sacha Baron Cohen’s side-splitting production Borat Subsequent Moviefilm which, for purposes of this note, features a distraught Kazakh stockbroker jumping out of his one storey office window. The skit refers to how, in the 1929 Wall Street Crash, despairing brokers apparently threw themselves out of skyscraper windows.
As it happens, that was a myth. In his classic book on the subject, economist and author JK Galbraith, wrote “the suicide wave …..is also part of the 1929 legend. In fact there was none.” So as the current market meltdown has been mild by comparison, no need to fret over the health of the broking class.
But what we do know is US stocks, and by extention those elsewhere, are now ‘officially’ in a Bear Market as depicted in the graph above from the WSJ. Which in practical terms means share prices are more likely to head lower than higher.
News which during the Bull Market pushed shares higher, will now be an excuse to drop them. As ever, traders will make and lose fortunes riding the cycles. For the rest of us, best to sit tight. Investing in shares rewards the resilient who ignore the volatility. Bull or Bear, it matters not in the long-run. As this too shall pass.
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