"Do you have an opinion on what it would take to frighten people? "
There may be some sort of external (to the market or economy) that trips a fast sharp decline. Or, maybe not.
"Isn't it possible that the bear may just whimper itself away? A long, grinding, demoralizing sideways trend without a 600 point spike down to mark the end? "
Gregory Bateson, the anthropologist, used to describe a type of catastrophic change this way: imagine a big fat frog in a pan of cool water. He/she (I don't know how to tell the gender of frogs) just sits there in sassy comfort. The pan, however, is actually on a stove and someone turns the burner on. The water heats in gradations. Does the frog jump?
Nope, because the frog is a sort of 'difference machine.' I.e., it is designed to detect the difference between one level of (in this case) heat verses another. Unfortunatly for the frog, the gradations of difference is now faces are not enough--the frog cannot detect gradual gradations. Result?
It gets boiled. If, however, you had tried to drop the frog into the pan of boiling hot water, it would have been able to detect the difference and would have jumped to save its life.
Most bear markets are like the pan of water on the stove. True, as djia wrote, bear markets last (historically) a lot shorter than bulls. But, the rub: they go too slowly for investors' difference detectors to say, "Jump!" in time.
Ciao,
David Todtman |
