Can You Bear It? - Show 132

Wednesday, August 6, 2014 5,897 views

At the time of this video, both the DOW and the S&P are flirting with 17,000 and 2,000 respectively. Both have climbed a long way from their low points on March 9th, 2009 when the DOW was sitting at 6,547 and the S&P 500 was clinging to life at 677. This bull market has been making a lot of people confident, but a bear market can come at any point. It may start tomorrow. It may stay in hibernation for years. This video isn’t predicting anything. Instead, it will explain what a bear market actually is.

A bear market is defined as at least a 20% drop from peak to valley. If the market drops 10%, it’s more of a correction than a bear. Since 1929 there have been 11 bear markets, which is about one every eight years. The most devastating drop was the one that coincided with Great Depression. If a Bear Market is a 20% drop, then the 86% free-fall the S&P 500 suffered probably needs a name of its own.  Bear Markets range in duration from three months to three years, with an average of about twenty months. But here is the most important point to remember with Bear Markets. In every historical bear market, investors that held on through the low point were eventually made whole and then some. Just look at the most recent Bear Market. An investment in the S&P 500 Index has gained over 40% compared to its pre-Bear peak in October 2007.

At IFA, our advisors are here to guide you through the bear and bull markets alike. So when those drops do happen, we can show you what it means in the big picture, and why you should still invest and relax.




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