A lot of bears get sweaty palms about
the possibility of a bear market.
One current argument for active management is that, with the S&P 500 and Dow Jones Industrial Average near all - time highs, the consequently heightened
possibility of a bear market means that active managers are needed to mitigate risk.
Nor should we ignore the very real
possibility of a bear market in bonds, perhaps with a couple of years of negative returns.
Not exact matches
The slight evidence
of an oversold
market is certainly nothing to speculate on, since
bear markets can remain deeply and repeatedly oversold without consequence, but it does allow the
possibility of a sharp intermittent rally to clear the
market for a fresh decline.
Kitces says he worries that advisors are in danger
of experiencing what he calls the «three strikes and you're out» risk, which is the real
possibility that «if clients have to go through a third
bear market in just over a decade, advisors are going to start losing clients.»
That's not to rule out the
possibility that the final low
of the
bear market is behind us (though I doubt it).
On the other hand, if there's just been a major correction, it might be a good strategy, but there's always the
possibility that the correction ushered in a recession and the beginning
of a protracted
bear market.
While such a move can lead to bigger gains, it comes at the expense
of higher volatility, and the
possibility of seeing your portfolio get hammered with big losses if we see a repeat
of a 2008 - style
bear market.
The
possibility of a «
bear market rally» aside, if the S&P 500 has already set its low, it will have been the first time that the
market has responded to a similar economic downturn with less than a 20 % loss on a closing basis.
The greatest unknown risk
of stock investing is the
possibility that you will try to follow a Buy - and - Hold strategy but come up short because you did not educate yourself up front as to just how bad things might get before the
bear market comes to an end.
There is also another
possibility and that is that we are seeing the final days
of the
bear market sentiment in gold.
This will mitigate the
possibility of starting your investment program at the beginning
of a
bear market and make it unlikely that you will have a bad experience right out
of the gate.
It is believed that there is a
possibility to earn money on the conditions
of bull and
bear markets on trading and
of course investments.