XLE is firmly entrenched in a pattern of lower lows and lower highs, which is a classic
definition of a bear market.
We have to go back to the psychological
definition of a bear market: «widespread pessimism that feeds on itself» (i.e. wave after wave of selling).
The most common
definition of a bear market in stocks?
Using the more nuanced
definition of a bear market quoted above, there have actually been two of them since March 2009!
Using that
definition of a bear market, the current bull market is barely over two years old.
If you look at times when U.S. stocks have tumbled 20 % or more — the standard
definition of a bear market — the average decline has been around 35 %.
But if the market is down 20 % from its peak — the usual
definition of a bear market — that's when you might consider catching up with a loan of $ 20,000, $ 30,000, perhaps even more.
Not exact matches
The S&P 500 - at -15.3 % might not have fit the «
definition»
of a
bear market, but don't tell that to the average stock, which fell 34 % from its 52 - week high.
The generally accepted
definition of a «
bear market» is a decrease
of 20 % or more for the stock
market that lasts at least 2 months from top to bottom.
This post is a little different from the first three articles, because I got the data to extend the beginning
of my study from 1950 to 1928, and I standardized my turning points using the standard bull and
bear market definitions of a 20 % rise or fall from the last turning point.
I used Ed Easterling's
definitions for the timing
of long lasting (secular) Bull
Markets and
Bear Markets during the twentieth century.
A secular
bear or bull
market is a prolonged trend
of falling or rising stock prices, lasting about five to 20 years, though there's no strict
definition.
One can see the classic trend following pattern: capital protection during
bear markets, some lagging performance during strong bull
markets (by
definition there is a bit
of a lag to jump on board
of a trend).
But there's a real
definition that's generally agreed on: A
bear market is a downturn
of 20 % or more, lasting at least 60 days, in any broad equity index such as the Dow Jones Industrial Average, the S&P 500, or the Nasdaq.
Long - term performance comparisons
bear out those
definitions: small - cap value stocks have dramatically outperformed large - cap growth stocks since mid-1926 with total returns averaging 14.82 percent per year vs 9.72 percent per year, according to data maintained by economist Kenneth French
of the famous Fama - French stock
market research team.