Recessions & Crashes: Memories & Lessons

[winston]

Keeping a lid on expectations key to avoiding black swans

by Andrew Wong

Therefore, it is true that the Fed's current monetary policy has created a bubble, but if expectation management is well done and effectively coordinated with monetary tightening, there is a chance the bubble will gradually deflate rather than burst and a crisis can be avoided.

Source: The Standard

https://www.thestandard.com.hk/section- ... lack-swans

[behappyalways]

How Do Bubbles Form? Gamestop and Tulips Can Help Explain | WSJ
https://m.youtube.com/watch?v=GunbxMqmGX4

[winston]

Not All Bear Markets Are Equal

We believe you can segment all the bear markets since World War II into four different baskets. Those four baskets are as follows:

1. Flash Crashes. These are brief but violent drawdowns in the stock market that typically shed more than 30% off of stocks in about 50 days, but quickly reverse course. Examples: 1987 and 2020.

2. Shallow Bear Markets. These are short and shallow bear markets that typically results in a 25% drawdown in stocks over the course of about 220 trading days. They sometimes coincide with a light recession, but not always. Examples: 196, 1948, 1956, 1961, and 1966.

3. Regular Bear Markets. These are mild bear markets that typically push stocks 30% lower over the course of 400 trading days. They tend to coincide with mild-mannered recessions. Examples: 1968 and 1980.

4. Deep Bear Markets. These are painful bear markets wherein stocks crash by more than 50% over the course of nearly 500 trading days. They always coincide with deep, prolonged economic recessions. Examples: 1973, 2000, and 2007.

The current bear market is not a flash crash. It has already lasted longer than both previous flash crashes, and fundamentally, shares no common characteristics with either the 1987 or 2020 flash crashes.

The current bear market, rather, is either a shallow, regular or deep bear market.

Our analysis suggests it’s a shallow bear market – which means the bottom is right around the corner!

Source: Hypergrowth Investing

[winston]

There won't be a 'v-shaped bottom' in this market: Strategist

by Ines Ferré

On Friday, the S&P 500 broke a 7-week losing streak, the index's longest since 2001.

"There's no V-shaped bottom here," Michael Antonelli, managing director and market strategist at Baird told Yahoo Finance Live on Friday.

"V-shaped bottoms are completely comprised of the Fed getting really super friendly, putting a tailwind [behind the market], [or] some sort of fiscal impulse," Antonelli said. "Neither of those are happening."

Last week, the minutes from the Fed's latest policy meeting suggested that after raising its benchmark interest rate by 0.50% in early May, the central bank is set to do the same in both June and July.

And if history is any guide, expect the current near-bear market to last roughly a year, Antonelli says.

"If you're looking peak-to-trough, the average bear market is about 338 days, so a little bit less than a year," Antonelli told Yahoo Finance.

"If you’re talking peak, to trough, [and] back to peak, that’s about 600 days, so a little over a year and a half. It is going to take us some time to get through this."

Year-to-date, the S&P 500 (^GSPC) is down nearly 13%, the Nasdaq (^IXIC) is down more than 22%, and the Dow (^DJI) is off more than 8%.

Following all 11 of the worst years in history, Antonelli notes, the index was higher five years later.

Source: Yahoo Finance

https://finance.yahoo.com/news/there-wo ... 57181.html

[winston]

How to Handle A Bear Market in Stocks

by TODD CAMPBELL

My best advice for a bear market is:

1. Raise cash. It is never too late to sell. You can always rebuy. If you rebuy at a higher price, consider it an insurance premium.

2. Don't get sucked into trying to predict the ultimate low. Focus on buying stocks as their chart improves. It is better to be late than early. Only amateurs try to predict exact turning points.

3. Develop a shopping list of stocks that you like fundamentally but wait for some signs that the market agrees with your assessment.

4. Maintain a positive mindset. Bear markets will create terrific opportunities for patient traders and investors.

If the stock price is beneath its 10-day and 21-day exponential moving average (EMA), I assume sellers are in control, and I stay on the sidelines.

Once a stock trades above its 21-day EMA, I give buyers the benefit of the doubt and look for set-ups to trade long. My primary target is generally the 50-day simple moving average.

Source: The Street

https://www.thestreet.com/investing/how ... n%2BStocks

[winston]

5 of the Biggest Bear Market Mistakes to Avoid

by Alexander Green

No. 1: Acting emotionally rather than rationally.
No. 2: Believing that a stock is a “Buy” merely because it has fallen in price.
No. 3: Trying to pick the bottom.
No. 4: Expecting the market to snap back immediately.
No. 5: Forgetting history.

Source: Wealthy Retirement

https://dailytradealert.com/2022/06/23/ ... -to-avoid/

[winston]

How bear market rallies trap dip buyers and frustrate investors

by Jared Blikre

At the beginning of bear market turns, these rallies are flashy and short-lived. As the market grinds lower, these rallies tend to grow bigger, more exciting, and quite deceptive.

During the dot-com bubble burst, it took nearly three years for the bear market to finally shake out bagholders from the first tech mania.

Bear market rallies can send stocks off to the races, and weary investors don't want to miss out.

Source: Yahoo Finance

https://finance.yahoo.com/news/morning- ... 44415.html

[winston]

Don’t Wait on Uncle Sam for Your Recession Warning

by Marc Chaikin

It takes six months after the start of a recession just to be able to say we’re in one.

By the time the government officially calls this recession, we’ll likely be near the other side of it.

Recessions may not last long, but they are still brutal. Don’t wait on the government to tell you it’s happening. The time to get defensive is now.

Source: Daily Wealth

https://dailytradealert.com/2022/07/08/ ... n-warning/

[winston]

The Forgotten Lesson of the Global Financial Crisis

by Brett Eversole

The S&P 500 was already reeling. It was down 19% from its high at the time. But the bottom was still a year away… And stocks went on to fall another 47% over that period.

That’s how painful a bear market can get. When it begins, the market will shrug off bad news. But once it gets going, even the seemingly worst possible outcome will get topped.

Source: DailyWealth.com

https://dailytradealert.com/2022/07/20/ ... al-crisis/

[winston]

Worried About a Recession? Here’s Warren Buffett’s Advice

by Katie Brockman

1. Don’t be afraid to continue investing
2. Invest for the long term
3. Choose the right stocks

Source: The Motley Fool

https://dailytradealert.com/2022/07/24/ ... ts-advice/