On 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.