The bear phase of the cycle is about estimating cash flows, and the strength of balance sheets, to identify who might not survive the bear phase well.
Not exact matches
Table 1 shows the years
of each bull -
bear cycle, the length
of the bull and
bear phase, and depth
of the following
bear market.
Bull and
bear markets often coincide with the economic
cycle, which consists
of four
phases: expansion, peak, contraction and trough.
That's fine in the bull
phase of the
cycle, but it can spell trouble in the
bear phase, when cash flow might go negative and skilled claims adjusters are hard to find.
Speculative frenzy rarely cools down without the
bear phase of the credit
cycle showing up.
To close this off, my main point is this: people want financial intermediation, particularly during the
bear phases of the financial
cycle.
Far better to eat into principal a little when spreads are tight, than to meet the spread target and get whacked in the
bear phase of the credit
cycle.
Bull and
bear markets often coincide with the economic
cycle, which consists
of four
phases: expansion, peak, contraction and trough.
Both have strong underwriting
cycles where a lot
of money is made in the boom
phase, and a lot gets lost in the
bear phase.
Remember, many P&C insurers have been technically insolvent (in hindsight) during the
bear phase of the underwriting
cycle.
It
bears keeping in mind that the total rate
of heat retention is higher than the long - term mean during such
phases in the
cycle.