Bull and Bear Stock Markets Two Sides of Same Coin

Bull and Bear Stock Markets Two Sides of Same Coin
By Ken Little, About.com

Bull and bear stock markets are two sides of the same coin.
Long-time investors know that bear markets are setting up the next bull market.
They also know that bull markets don’t run forever.
The longest running bull market ever was from 1990 – 2000.

Bull or Bear Market
It is impossible to know when a bull or bear market is officially over except through the 20-20 vision of history.
All bull and bear markets will exhibit periods that look like reversals, but are just momentary before the bull or bear regains control.
We now know that the bull market ended in March 2000, but at that moment, it wasn’t clear the party was over.
The three-year bear market that followed was pushed by the tragedy of 9/11 and a recession.

Bottom of Market
CNN pointed out that the Dow bottomed out at 776 in October of 2002.
From that point, the market has gone on to record heights.
Long the way, there have been some significant dips, but followed by a continuation of strong upward pressure.
This is all easy to see now, but when you are gasping for air as your portfolio value plummets, it’s not so easy to step back for perspective.
In the end, good companies have a better chance of weathering storms the sweep the market and the economy.

Necessary Bears
Bear markets perform the necessary service of deflating values and sweeping the market clean of stocks that are weak and riding on fads alone.
Your faith in solid fundamentals will usually pay off over time, but even a great company’s stock can get banged around in a tough market.
The lesson here is that stocks, as illustrated by the Dow, are good long-term investments, but dangerous short-term bets.

Comment: According to Suze Orman, we are in a secular bear market starting from the year 2000. She opines this will last 15 years. In between 2000 and 2015, there will be the occasional cyclical bull market lasting a few months to a few years.

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