YOUR AVERAGE BEAR
12 October 2011 by Cullen Roche
14 Comments
Mebane Faber of Cambria Investment Management provides this useful chart from The Leuthold Group. It shows the average length and depth of bear markets going back to 1899. The data shows the following:
Average bear market decline (1899-2009): -37%
Average bear market decline (1945-2009): -30%
2011 bear market decline: -19%
By historical standards, this bear market remains meager.
I will leave comment on this chart alone. Because come ON. But just so you know, you owe me one.
Leuthold on stocks and the general market condition, from almost two weeks ago, just in case anyone hasn’t read it yet.
http://online.barrons.com/article/SB50001424052748704783104576598743074218316.html#articleTabs_panel_article%3D1
OK so 2011 is a below average bear market. Because of the definition of average some bear markets have to be below average just like some will be above average ! Am I missing something ?
I will give you my opinion of this chart (as a non-expert analyst)
First: The duration so far is way below average in months – so if we have an average duration we still have a long way to go. And most believe we will have a longer than average duration.
Second: The steepness in the decline so far implies that by the time we get to average duration we will be way way down. (more than 55% down)
Sorry, accidently hit Post (cont.)
However, if you look closely at the duration where it says We are here it is at roughly eight months. So I do not understand its representation here. Is this graph saying that we have been in this bear market for only 8 months? Is this an old graph?
Nailed it.
Bear markets are a function of not just depth, but depth across time.
By historical standards this one is far from “meager”, in fact, it is among history’s fiercest at this juncture of the downturn according to the chart, analoging quite well 87, 37, 07-09 and 29, which doesn’t appear. Further its trajectory appears even harsher than 73-74, which itself was a 50% down move in less than two years…
B Ferro
My anticipated counter trend rally is front-end loaded. The bulk of this rally is already complete. There are some attractive trades still but..many of my buys of individual stocks have already acheived my target.
My portfolios as of today and last week have been 72% cash. I am getting studying some agribusiness stocks and will be looking to that which is selling off…mainly pockets of fixed income.
Our initial target is 1250 with a higher range of 1300. Anything above 1250 I’m shorting. But there’s not enough left for me to go long here. Our first target down is 975…then 875…back up and then 2014- 2015 the last of the bubbles bonds finally pops and bond yields give us the trend line you down to the secular bear low. Christie becoming president. Similar to 1982 with Reagan coming in….housing is on the mend…regulation starts to ease…tensions with China(1980s Russia)..Christie..breaks down the wall of North/South Korea(East and West Germany)..free markets work properly…business invest…new technology and at the end of the 18 year greates bull market in history….we(not me and those alive here on the TPC)forget once again all the lessons we learned..and the market crashes once again in 2030-2033…I retire in 2029.
just read my post…I promiss I’m not intoxicated.
B-Ferro.
Looking at soybeans…Bullish set up..extreme pessimism, and seasonality for ags.
And Basic Materials.
I will have to sit this one out and will look to where the puck is going to be which will be a revisit of the issues the market is ignoring. Looking at fixed income depending on the length of this rally. My guess is 2-3 months..Dec with the remaining gains from here being very choppy at best.
Nice targets, similar to mine. But things could get ugly fast in 2012, so we may retest 2009 lows. But I think we still have to make lower low for the year and I think too around 975. Maybe first half November, or could come rather fast after this uptrend turns down, which should be around where it is right now, I don’t think it can get to 1250 only than in some bullshit news (which could happen, eventually).
It shouldn’t go above MA100 and MA200 should be very tough which is above 1250-1275 range, your shorting range. If it breaks up this is crazy.
What worries me is the silver-gold ratio remaining flat in combination with a rising stockmarket (e.g. S&P 500). We saw the same in june, july and august of this year.
And rising T-bond yields (10 year and 30 year) don’t bode well for the future as well. I look every day at the muni bonds (e.g. the ETF called MUB). Investors have bought A LOT OF that stuff because it was tax exempt. When (not if) that market breaks down, then things could/will really get ugly. (use your imagination).
Very interesting VII, there’s a lot to like about your future timeline. Not sure if you’re familiar with Ray Kurzweil, but he’s calling for a biotech boom (bubble?) later this decade, followed by a nanotech boom in the 2020s. I think this would jive pretty well with your new technology theory.
George Friedman (The Next 100 Years) has a different take, in which demographics are a major drag on the economy until about 2030 when we change gears and start aggressively recruiting immigrants and see a major boom around 2040.
Either way, I’m anticipating buying opportunities galore in the not-to-distant future.
Interesting graph. I would recommend readers of this website to visit the website of Mr. Doug Short. He regular posts a number of interesting graphs as well.
E.g.
http://advisorperspectives.com/dshort/updates/Four-Totally-Bad-Bears.php
http://advisorperspectives.com/
I still use the 1929-1930s model for my stockmarket projections and not the 1973 and 2000 bear market model. Because we’re now in a “”post bubble credit contraction”" like after 1929. After 2000 and 1973 credit still expanded.
I like dshort too.