Recessions & Crashes: Memories & Lessons

[winston]

Braving bear markets: 5 lessons from seasoned investors

Source: Capital Group

New Cycle: deglobalisation, a shrinking labor supply and decarbonisation.

Profit margins and highly valued stocks will face continued pressure.

Steer clear of many of the fast-growing primarily U.S. companies that were the winners of previous cycle.

Commercial banks and consumer staples in China, Italy, France, Japan and Latin America.

More value-oriented companies like defense contractors, insurers or energy companies.

50 years from now, production of iron ore will remain important.

When there are regime shifts in the market, the stocks that represent the former leadership can take a long time to recover.

https://www.capitalgroup.com/individual ... stors.html

[winston]

The Biggest Gains Start at the Darkest Times

by Chris Igou

Times are dark today. But dark times always create the best buying opportunities.

That doesn’t mean stocks can’t fall further. And it certainly doesn’t mean you should back up the truck to buy right now.

But if you’re a long-term investor, the money you put to work in the months to come will likely go toward some of the best buys of your life. So please, don’t let the fear of this dark moment paralyze you.

Source: DailyWealth.com

https://dailytradealert.com/2022/08/05/ ... est-times/

[winston]

Bear Market News And How To Handle A Market Correction

History shows that three out of four stocks will decline during a bear market.

But as the bear market continues to play out, investors should focus on two key objectives:-
1. Stay protected by learning when to sell stocks to cut losses and capture profits. 2. Prepare to profit when the market turns around.

While in a bear market, it's best to avoid buying stocks since most will follow the general market trend and head lower. But it's also important to avoid getting overly bearish and negative to the point where you ignore the stock market.

During a downturn or market correction, look for an attempted rally. Day 1 of an attempted rally begins when a major index closes up from the previous session.

For the attempted rally to stay alive, the index cannot undercut the low of Day 1.

On Day 4 or later of the still-intact attempted rally, the Nasdaq or S&P 500 must deliver a strong gain in volume up from the previous day. That big gain in rising volume is the follow-through day. It confirms that a new uptrend is underway.

Source: IBD

https://www.investors.com/how-to-invest ... src=A00220

[winston]

Insights from the Middle of a Bear Market

by Marc Lichtenfeld

Since 1929, stocks have risen roughly 78% of the time. Nearly 4 out of every 5 days.

Of course, in a bear market, it can be the opposite, with lots of bad days strung together. But if you’re invested for even a few years, the odds are you’re going to make money.

Bear markets last an average of 9 1/2 months and drop an average of 36%.

On the other hand, the average bull market lasts for nearly three years and rises 102%.

But if you ignore the short-term volatility and stay in the market, history proves that you won’t.

Source: Wealthy Retirement

https://dailytradealert.com/2022/10/26/ ... ar-market/

[winston]

How should investors invest in a bear market?

by Teh Weiyang

My belief is that the investment time horizon should be forever when selecting individual stocks (preferably broad-based exchange-traded funds or ETFs).

I will only recommend exits should the primary fundamentals of the company change and deteriorate for the worse.

All I can tell you is that the current overall valuations are not as frothy as they were compared to the same time last year and some fantastic companies are indeed trading well below their long-term averages.

Source: Business Times

https://www.theedgesingapore.com/capita ... ear-market

[winston]

Bear markets come in three stages; and we’ve only just started the second, says veteran analyst.

By Jamie Chisholm

“Bear markets usually come in three stages.

The first one is we take a lot of the frothy excesses and euphoria out of the market in terms of the sexy names that we saw in 2021 and we take a PE ratio down. We’ve done that, we went from 22 times earnings, call it 16 to 17,” says Boockvar.

In the second phase, he adds, investors start calculating the economic and company earnings consequences of the ongoing rises in interest rates…

”and then the third phase is everyone throws in the towel. No one wants to own a stock again, and that’s your bottom and that’s when you need to be buying stocks hand over fist.”

The next couple of years are going to be challenging for those with shorter-term time horizons.

Source: Market Watch

https://www.marketwatch.com/story/bear- ... eid=yhoof2

[winston]

This May Be the Longest Bear Market in History

by Sean Williams

One of the smartest moves investors can make during a lengthy bear market is to buy dividend stocks.

Investing in defensive sectors and industries can be a genius move, too.

A third smart move during lengthy bear markets is to consider buying exchange-traded funds (ETFs).

The key point here is that continuing to invest, even during a potentially lengthy bear market, is a wise decision for long-term-minded investors.

Source: The Motley Fool

https://dailytradealert.com/2023/01/11/ ... n-history/

[winston]

Recession Coming? Don’t Be Scared Out of the Markets

by Marc Lichtenfeld

Doom and gloom sells. There are a lot of serious problems in the U.S. and the world, so it’s easy to point out all of the reasons the economy is in trouble and stocks will collapse.

Except, they generally don’t. And on the rare occasion they do, they bounce back.

Historically, the market goes up an average of about 10% per year.

The media keeps you hooked on all of the bad news in the world. And there are admittedly a lot of terrible things out there. But most people get up in the morning, go about their day and live their lives.

Sure, there are occasional black swans – unexpected events that can not only disturb our markets but upset our daily rhythms. But historically, they have been short-lived, and the economy and markets recover.

The next time someone tries to scare you out of the markets, remember that history is not on their side.

Source: Wealthy Retirement

https://dailytradealert.com/2023/02/04/ ... e-markets/

[winston]

Market Behaviour in US Recessions
Analyst: Zane Aw

Many investors are wondering if the US will enter a recession in the near future. To better understand how the market has performed during previous recessions and the recovery thereafter, this report looks at how the S&P 500 did in the last 5 recessions since the 1980s.

Recessionary declines typically last under a year with the drawdown ranging from 20% to a substantial fall of over 50%.

Looking at the 6-month market performance pre- and post- recession, stocks may or may not decline before the recession starts to serve as an indicator.

However the market tends to bottom and begin recovering well before the recession ends, with a period of good gains stretching for the 6 months post the recession.

With the 6-month performance post-recession rewarding investors with decent returns of over 9%, the key takeaway for investors is to buy the dips after a substantial decline in a recessionary period, even when they have missed the market bottom as they stand to benefit from a large rally.

Investors should keep in mind history is on their side as the S&P 500 has recovered to pre-recession levels following every recession.

Source: Phillips

https://www.stocksbnb.com/tech-pulse/to ... ecessions/

[winston]

Topic #4 – Market Behaviour in US Recessions

Recessionary declines tend to produce substantial drawdowns over a short timeframe, typically lasting under a year with the extent of decline ranging from a technical bear market drawdown of 20% to a substantial fall of over 50%.

During a recession, there has always been a large relief rally period with gains of over 20%, which should not be mistaken as the end of the recession, that usually commences during or after the market bottoms.

Market tends to bottom and begin recovering well before the recession ends, with a period of good gains stretching for the 6 months post the recession.

Recession-related stock declines represent serious corrections that have a steep peak-to-trough, falling an average of over 38% in the last 5 recessions.

In addition, with the 6-month performance post-recession rewarding investors with decent returns of over 9%, the key takeaway for investors is to buy the dips after a substantial decline in a recessionary period, even when they have missed the market bottom as they stand to benefit from a large rally.

Last, but not least, investors should keep in mind history is on their side as the S&P 500 has recovered to pre-recession levels following every recession.

Source: Phillips

https://www.stocksbnb.com/tech-pulse/to ... ecessions/