I got to see above 30 % «average» return and developed convention after seeing couple of ace stock pickers like Paul Asset that getting 25 % cagr or above is indeed possible and achievable over long term of
bull and bear phases.
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.
But now let's talk about the transition between
the bull and bear phase — that is the «pop, Pop, POP.»
Not exact matches
Bull and bear markets often coincide with the economic cycle, which consists of four
phases: expansion, peak, contraction
and trough.
This includes recognising market tops, distribution
and accumulation
phases and whether, overall, we're currently in a
bear or
bull market.
Remarks: Due to their conceptual scope —
and if not explicitly stated otherwise — , all models / setups / strategies do not account for slippage, fees
and transaction costs, do not account for return on cash
and / or interest on margin, do not use position sizing (e.g. Kelly, optimal f)-- they're always «all in «-- , do not use leverage (e.g. leveraged ETFs), do not utilize any kind of abnormal market filter (e.g. during market
phases with extremely elevated volatility), do not use intraday buy / sell stops (end - of - day prices only),
and models / setups / strategies are not «adaptive «(do not adjust to the ongoing changes in market conditions like
bull and bear markets).
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.
Why else are credit cycles long
and benign in the
bull phase,
and short
and sharp in the
bear phase?
Organize society for stability, not boffo profits for banks in the
bull phase,
and huge losses / bailouts in the
bear phase.
Bull and bear markets often coincide with the economic cycle, which consists of four
phases: expansion, peak, contraction
and trough.
Credit spreads are tight for long periods during the
bull phase,
and very fat for short periods during the
bear phase.
Like
bear markets,
bull markets also can be short
and sharp, but they can also be long
and after the early sharp
phase, meander upwards.
The credit cycle tends to be like this: in the
bull phase, a long period (4 - 7 years) with few defaults
and low loss severity followed by a
bear phase, a shorter period (1 - 3 years) with high defaults
and high loss severity.
They will buy late in a
bull phase,
and sell late in a
bear phase.
The 65 week moving average acts as support during the
bull phases and as resistance during the
bear phases.
The 23 week Relative Strength Indicator (RSI) stays above 50 during
bull phases and below 50 during
bear phases.
When
bear - baiting
and bull - baiting were
phased out in 1835, the Pitty came to be used for rat - baiting
and dog fighting instead.