Bear Market is a term that sends fear into Wall Street and investors. What does it mean? And when do we enter a Bear Market?
The market pain is widespread. In other signs of trouble, the technology-packed Nasdaq, which had been leading the market higher, was down more than 19% from its February peak at Monday’s market low. The Dow was off more than 19.
The Fed is expected to cut rates sharply again at its meeting next week. And investors are hoping the panic selling has crested, and that the market can avoid the panic selling that has shaved more than 5,700 points off the Dow in less than three weeks.“The bull market … will gradually succumb to the spread of the coronavirus and the weakening economy,” Sung-Won Sohn, a business economist at SS Economics and professor at Loyola Marymount University. told USA TODAY.
However, the past shows bear markets can create far more destruction. In the 2007-09 bear set in motion by the 2008 financial crisis, the S&P 500 cratered nearly 57%. And after the Internet stock bubble burst in 2000, stocks fell 49.1%. “The more positive recent developments, including evidence of successful virus containment in Asia, higher potential disposable income for consumers, fiscal and monetary loosening, and more favorable equity valuations—may take time to feed through into market pricing," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a research note.
“Buying the dip is entirely a matter of an investor’s particular risk appetite and tolerance,” Bahnsen said. “There are reasons this market can rally violently off of the carnage. And there are reasons we drip lower as recessionary fears linger into the second quarter.” One strategy is to take some losses now and use those losses to offset income on your tax return for the 2020 tax year and put the proceeds of the stock sales into a money market account.
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