Bear Markets Will Come … Some Time

Jun 2015

History teaches us that there will be bear markets from time to time, but they will very likely prove to be temporary.  Indeed, I am looking forward to living through another half-dozen or so bear markets, because:  (1) this will likely necessitate me living to a ripe old age, and (2) the greatest bargains—and the greatest opportunities for future growth—come in the depths of bear markets. ... As fascinating as bear markets are, they simply can’t be predicted with any precision.  We can’t over-emphasize this point, and you shouldn’t either.  Anyone who says he can predict the timing of bear markets is mistaken or, worse, misrepresenting his abilities.  There are people who sincerely believe they can time markets, but when it comes to successful investing, sincerity is not enough.  Among those who claim—often with much fanfare—they can practice near-exact timing, the chances of encountering misrepresentation climb alarmingly.  Simply put, bear markets are an integral part of long-term investing, and they are unavoidable.  The history of bull and bear markets combined shows that long-term stock returns have proved to be excellent, especially compared to bonds or commodities.  History also tells us that attempts to keep the good (bull markets) and avoid the bad (bear markets) frequently lead to the opposite combination.