Enter 2008. 2008 was the game changer as a secular Bear market came on the scene.
What are the implications for investors, especially at this stage of a secular bear market?
FORBES: Managing Your Retirement Fund In A Secular Bear Market
There is little doubt but that the next secular bear market began from the market peak in 2000.
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If it is a typical secular bear market it probably has another six or seven years to go.
FORBES: Riding The Rallies And Shorting The Slides In A Big, Long Bear Market
But the subsequent cyclical bear market turned out to be the beginning of a 17-year sideways secular bear market.
In a secular bear market, however, that strategy is a prescription for disaster.
In a secular bear market the price of most stocks falls or stagnates, but price is less significant that valuation.
In the 1966 to 1982 secular bear, the absolute low was made in 1974, similarly eight years into that secular bear market.
Because if you used full market cycles, there truly is no such thing as a secular bear market not one I can measure historically.
We now sit in the midst of the fourth secular bear market since Charles Dow developed his famous index of industrial stocks in 1896.
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The banks have been in a secular bear market since February 2007, and in my view 2011 looks like a potential replay of 2007.
So, inside the longer-term secular bear market, you get what I call mini bulls and bears, what some people call cyclical bears and cyclical bulls.
The following chart shows the last secular bear market of 1966-1982.
First, the pattern for raw material prices over the past century has seen roughly a 10-year upswing followed by a 10 to 20-year secular bear market.
The first cyclical bull market since the secular bear market began, carried the market back up to its peak of 2000 before the 2007-2009 cyclical bear market took over.
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The March low last year, in the 2nd cyclical bear market since the 2000 peak, took place 9 years into the secular bear market, and was to a lower low.
FORBES: This Bull Market Could Hit Old 2000 Peak Before Ending
One interesting point I found is that generally in a longer-term secular bear market, the absolute low of that bear market is generally reached in the middle of the bear market.
My work strongly suggests that this is the start of a significant correction, or perhaps it was even the top of a cyclical, two-year bull market in a larger, secular bear market.
It was 17 years again, in 1923, before the sideways secular bear market ended and the market broke out above 100 for good, launching into the powerful bull market to the 1929 peak.
But if we are in a secular bear market, which seems likely, since nothing has happened in the last ten years to alter that picture, it probably has some time to go yet.
The current secular bear market began in 2000.
FORBES: This Bull Market Could Hit Old 2000 Peak Before Ending
In secular bear markets the periodic cyclical bull markets can be exciting and profitable, like the 2003-2007 bull market, and the current one, but are only temporary and the secular bear market takes over again.
Does that mean that the current secular bear market will last until 2017, but that the current cyclical bull market will last a couple more years, and not end until it has reached its peak of 2000 again?
FORBES: This Bull Market Could Hit Old 2000 Peak Before Ending
At the time I said I expected the new secular bear market would look more like those of 1906-1923, and 1966-1982, than to the secular bear that followed the 1929 crash, which took place during the Great Depression.
FORBES: This Bull Market Could Hit Old 2000 Peak Before Ending
But it is pretty much agreed that when the market topped out in March 2000 it was the end of the long 1982-2000 secular bull market, and beginning of a 2000 to who knows when secular bear market.
Given that retirees over this decade and longer are confronting the conditions of a secular bear market, it is important to start with a reasonable expectation about future returns and market conditions, then to apply appropriate investment strategies and approaches.
FORBES: Managing Your Retirement Fund In A Secular Bear Market
But of course for that positive for gold to be a factor, that it tends to move opposite to the stock market in its long-term moves, the stock market would have to go into another correction, extending its secular bear market.
His advice encourages investors to seek the benefits of preparation and risk management, the essential elements for investing through this secular bear toward the next secular bull market.
FORBES: Managing Your Retirement Fund In A Secular Bear Market
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