Are we in a Bear Market?
The answer is “it depends.” While that may be the most succinct answer, it is hardly satisfying.
The classic definition of a bear market is when an investment has declined more than 20%.
For comparison, a correction is a drop of 10-20%. But, and here’s the critical part, the 20% decline needs to be measured from a specific point in time. A stock’s price could be down 20% from its price six months ago, but at the same time could be higher compared to 18 months ago. To some investors this hypothetical stock could be in a bear market (for those who invested near the top), while other investors could only be experiencing a minor pullback in a longer term bull market.
To dig a bit deeper, what does the answer to the bear market question depend on? Well, “it depends” on time — the length of the measurement period. This Market Brief reviews the year-to-date (YTD) performance of stocks and compares them with other investments over much longer periods of time to discover which investments may really be in a bear market.
Read full December Market Review.
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