Returns From the Bottom of Bear Markets

We are now in the 13th worse bear market since the late-1920s with losses just shy of 30%.

It would take another 15% drop from here to get to a 40% loss.

It would take another 30% drop from here to get to a 50% loss.

I don’t know if this is going to happen and neither does anyone else but it’s certainly possible. It’s happened before and it will happen again, even if it’s not this time.

Looking past this pandemic almost doesn’t feel right because the worst is still yet to come.

I don’t know what’s yet to come in the markets because investors are recalibrating their thoughts about the future on the fly.

It’s anyone’s guess what comes next.

But eventually we will get past this. We ALWAYS do. If you don’t believe this, what’s the point of investing in the first place?

Stocks will bottom and there will be a massive, face-ripping rally.

I don’t know when but it will happen.

Here are the other 12 bear markets that are worse than the current version along with their ensuing one, three, and five year forward returns:

The bad news is I have no idea when stocks will bottom. Maybe it was today? Maybe it will happen in a week…or a year. Who knows?

But it’s going to come at some point.

Will you invest at the absolute bottom? Not unless you’re ridiculously lucky. But the point remains that the bigger the losses the higher the expected returns.

This feels like an awful time to buy stocks.

That’s usually a good sign (although things could always get even more awful from here).

This weekend I’ll share how I’m personally investing through this market crash. Stay tuned.

 
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