MICHEL PIREU: When the bears descend and linger, do you run or hang on?
Empirical data show that market dips can last much longer than many investors can endure
A single swipe of a bear’s claw can be enough to kill you." — Adam Cowden. Bear markets often start with a sharp, swift decline, resulting in an oversold bounce that retraces a portion of that decline, after which the decline continues — but at a slower pace as the fundamentals deteriorate. Bear markets, periods where the stock market goes down 20% or more, happen frequently. From 1900 to 2014, there were 32 in the US. Statistically they occur once every 3.5 years, and last an average of 367 days. The last one occurred in 2007-2009, when the US market dropped 57% over 17 months. Someone unlucky enough to invest a lump sum on the day of the October 2007 high, provided they had the fortitude to stay with the investment and reinvest dividends along the way, would only have been underwater four and a half years, which seems remarkably little time to fully recover from one of the worst bear markets. The big question: was this more the exception or the rule? Credit Suisse Global Investmen...
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