What Does a “Bottom” Look Like?

Aug 2008 //
Risk vs. Volitility

One of the questions we're frequently asked is, "When will the market stop declining?"  Since nobody can know the precise answer to this question, perhaps it would be helpful to discuss what market bottoms look like.  Market history teaches us that a bottom typically looks like anything but a bottom until well after the fact, and most people won’t recognize one as it occurs.  Instead, as the market starts to recover, frequent sharp pull-backs keep most investors worried that the bottom is still in the future.