How long will this bear market last? How will we know when it’s coming to an end? Who knows?
If anyone does, it’s Russell Napier. He’s a the author of Anatomy of The Bear, a book aobout the four bear markets of the twentieth century. Napier read 70,000 Wall Street Journal articles from the periods two months before to two months after the end of each bear market. [Note: he said the research took him a year; that seemed kind of quick to read seventy thousand of anything, but it turns out that there are 525,600 minutes in a year, so if he could polish off one article (with notes) every two minutes, it’s believable.]
What he found was both fascinating and frightening, but very instructive.
The frightening part is how long bear markets last. 1929 to 1942? 1968 to 1982? Given that the last market top was in March 2000, you can see why he predicts this bear market to last until 2014. Oh S#!%!
Before you get too downtrodden, I should mention that Napier says that bear markets are rife with opportunity for savvy investors. Would you like to know more about those opportunities? Then have a listen to podcast interview that Napier did in December with The Wall Street Reporter. I’m serious. Do yourself a favor and learn from the author’s wisdom.
Here are a few highlights to entice you to invest your time wisely:
1) He predicts that there could be four recessions as part of this bear market. Four recessions in one bear market? Yep. He explains why this is fairly indicative of bear markets. Did you know that? Me neither. Oh, and we’re starting into number three of this bear market.
2) Pay attention now, because this one’s going to leave a mark if you’re not paying attention There are plenty of opportunities to make lots of money in these long bear markets, but the sure-fire way to lose money is buy-and-hold. Yes, that’s right. Buy-and-hold strategies are for chumps and marks for the next six years. What is your financial advisor telling you? Dollar cost average purchasing of index mutual funds (or index ETFs)? History says that’s folly, but your guy might be smarter than history…BWAHAHAHAHAHAHA!
You’re going to have to manage your money a little more carefully for the next few years.
The interview ends up with the headlines we should expect to see near the end of a bear market. I won’t reveal them all, but the one that struck me was that in every previous case there was a crisis in confidence questioning whether the U.S.A. was a significant world leader anymore. Hmm…but in each case, the answer was a resounding yes!
Photo courtesy of artct45