However, for bonds to provide a similar level of return as they did during
the last equity bear market described above, yields would have to fall to approximately minus 2 %.
It has been a decade since
the last equity bear market showed its claws.
Not exact matches
But having lived through two big
bear markets in the
last 15 years, elderly investors can hardly be blamed for regarding
equities with caution.
The
last time this ratio was so high was in March 2009 when
equity markets were caught in the final throes of a savage
bear market.
The ongoing surge in demand, which has put an end to a long -
lasting commodity
bear market that began in 2011, also helped the asset class to occasionally decouple from broad selloffs in challenging global
equity markets.
The idea that we have seen the
last bear market in
equities ever does seem extremely far fetched, though few in the mainstream media want to admit that the US is facing huge debt burdens that will probably only grow as time goes on.
If much of the investment into bond mutual funds that has occurred the
last couple of years is for purposes of dampening the volatility of a portfolio — and with the 10 - Year Treasury yield at 1.8 percent it's difficult to argue for a different motivation - then it's important to think through the thesis that bonds will defend a balanced portfolio in an
equity bear market in the same way they have, especially to the extent they have in the
last two
bear markets.
In the introduction to the
last Bull
Bear Market Report, I further developed the thesis that an impulsive equities bull market began in November 2012: Most analysts continue to make the mistake of believing that a secular bull market started in March of
Market Report, I further developed the thesis that an impulsive
equities bull
market began in November 2012: Most analysts continue to make the mistake of believing that a secular bull market started in March of
market began in November 2012: Most analysts continue to make the mistake of believing that a secular bull
market started in March of
market started in March of 2009.
Considering that
equity investments can easily underperform bonds over periods as long as 10 years and that
bear markets can
last many years, investors must have a healthy fear of
market volatility and budget their risk appropriately.
This
bear market may
last very long and it is not advisable to buy all your
equities at once.
When looking at the above chart, it's clear that investors that held bonds through the
last two
equity bear markets were especially fortunate.
«Following two devastating
bear markets in the
last 17 years, investors, especially those nearing or in retirement, recognize the vulnerability of
equity markets and are seeking risk management solutions.
Options investors are paying twice this decadeís average to protect against losses in U.S. stocks through 2011, signaling the
bear market that already wiped out $ 10.4 trillion of
equity value may
last two more years.
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.
6) Bernanke has deliberately squeezed investors into
equities and the Fed has a perfect contrary record at preventing the
last two 50 % S&P 500
bear markets during 2001 - 02 and 2007 - 09.