Not exact matches
Think about it; if you were unlucky enough to buy into the
stock market at the
peak in 2008, just before the financial crisis hit full force, your gains (excluding dividends) wouldn't buy you much
more than two loaves of price - fixed bread at Loblaws and a bag of President's Choice sour grapes.
Anticipating the 2000
stock market bust and 2007 credit bust, Rodriguez maintained cash levels averaging
more than 25 % in his FPA Capital Fund and
peaking at 45 % in 2007, compared to 1 % to 3 % levels in the 14 years in investment management leading up to 1998.
Generally, a bear
market happens when major indexes like the S&P 500, which tracks the performance of 500 companies»
stocks, and the Dow Jones industrial average, which follows 30 of the largest
stocks, drop by 20 percent or
more from a
peak and stay that low for at least two months.
As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for
stock appreciation, which would require the maintenance or expansion of already high price /
peak earnings multiples; 2) we also should recognize an uncomfortably large potential for
market losses, particularly given that the current bull
market has now outlived the median and average bull, yet at higher valuations than most bulls have achieved, a flat yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other
market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become
more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.
A
market correction is defined by the value of the
stocks as a whole drop 10 % or
more from a recent
peak.
U.S. dividend
stock valuations have come down since
peaking in late July amid investors» search for yield, and they are now
more in line with those of the broader
market.
During the tech bubble growth
stocks became
more expensive, pushing the value discount to
more than 70 % at the
market peak in 2000.
Hence, to capitalize on the final blow off, investors must let their
stock market holdings ride until the precise moment the
market peaks — and not a moment
more.
a speculative bubble covering roughly 1995 — 2000 (with a climax on March 10, 2000 with the NASDAQ
peaking at 5132.52 in intraday trading before closing at 5048.62) during which
stock markets in industrialized nations saw their equity value rise rapidly from growth in the
more recent Internet sector and related fields.
During the tech bubble growth
stocks became
more expensive, pushing the value discount to
more than 70 % at the
market peak in 2000.
Reason being, while the US declined ~ 50 % from its
peak, many emerging
market stock exchanges declined 75 % or
more.
The evidence for this alert of underwhelming importance was that even though broad
market indices like the Standard & Poor's 500 hadn't dropped 20 % from their previous
peak, many small
stocks as well as the small - cap Russell 2000 index were off
more than 20 % from their
peaks.
Or, to put it another way, it would be a huge mistake to stay 100 % in
stocks on the theory that «you can handle it» only to find that the reality of owning an all - equity portfolio during a
market meltdown like the 50 % - plus downturn from late 2007 to early 2009 is
more financially and emotionally unsettling than it seemed when
stock prices were at or near a
peak.
A bear
market is typically defined as a 20 % reduction or
more in
stock prices from their most recent
peak.