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The Bear Market – How Long and How Low Will It Go

bear-market.jpgOn Wednesday, July 2nd, the US Stock market officially became a roaring bear market, falling below the defining 20% decline mark from its peak in October 2007.

According to Bear Markets, by Harry D. Shultz (Prentice Hall 1964), the average length of the past 26 Bear Markets is 16 months, with a range of 2 months to 56 months; the range of the declines is 14% to 90%, with a mean of 32%; the 508-point decline (22.6%) on October 19, 1987, was the largest single-day decline.

The Dow last peaked at 14,198 on October 11, 2007. If this bear market follows the averages, the Dow will bottom around the first quarter of 2009 at 9,655. Any way you figure it, the “blue light special” is flashing as stocks are on sale. And, if past trend hold true, very few investors will take advantage of the opportunity.

At KFG, we will continue to buy asset classes that are on sale by doing what we’ve always done, rebalancing our portfolios on a monthly basis. Currently, that means taking profits on commodities and purchasing stocks.

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2 Responses to The Bear Market – How Long and How Low Will It Go

  1. Joanne and Gary July 8, 2008 at 3:10 pm #

    I think I feel better – do I?
    What does this mean to us?
    Joanne and Gary

  2. Rick Kahler July 8, 2008 at 3:17 pm #

    Joanne and Gary,

    It means anyone who has diversified their portfolio with over 5 asset classes is in good shape.