Donald,
I visited your web site for the first time today. Appreciate the effort you and L3 have put into that. I'm sure I'll revisit often.
The bear market in the 70's lasted about 9-10 years.
I was not involved in the market in the 70s, but I certainly remember that era. When I hear about the 10 year bear market of that time, I'm inclined to pull up charts that go back that far to see the evidence. While it is true that over a 10 year period the Dow and S&P500 made no net progress, within that 10 year period there were a couple of distinct cycles. The initial decline starting in 1973 lasted somewhat less than 2 years and was followed by a sustained climb that recovered substantially before slipping again.
For the Dow, the recovery was about 90% during a year and a half period, followed by a second pull back lasting another year and a half and then almost 2 years of going nowhere before the recovery really set in in 1980. The S&P had an initial recovery less dramatic than the Dow, followed by a smaller second decline, and began a sustained climb earlier in 1978. The earlier move by the S&P appears to be due to the power of the Nasdaq, which had only one sustained move down in 1973-1974, with a couple of ugly dips in Oct78 and Mar80.
The point of all this is that I don't see a 10 year bear market, unless you happened to be a die hard buy and hold type. I see a succession of bull and bear markets that on average went nowhere, but there were periods of sustained trend during that time when a position trader could have done very well and emerged from the decade with some healthy profits. I expect there were a lot of savvy traders who did just that.
No doubt it will be wise to keep a lot of powder dry in the near term, but I see no reason to think we won't have some great opportunities along the way, even if the market averages flat for some time.
Dan |
