Reason Number Two for Loving the Bear Market
As I said in part one of this series, “I want to give the bear market a hug!” I also said I hoped the bear market endured until at least January 1, 2023. Although I like buying more shares of quality investments at lower prices, there is a second reason to love the bear. The bear has a limited life expectancy. Generally speaking, bear markets don’t last as long as bull markets.
How long does a bear live? A bull?
I have some friends who are veterinarians, so they may disagree with what I found, because I did not confirm this with my expert friends. However, it looks like real bears can live 25 years and real bulls have a life-span shorter than a bear. It looks like bulls might live to be 20 years old. Maybe bears live longer because bears sleep for more of their lives. (Obviously I have no experience or data to prove any of this!)
How long does a Bear Market Live?
Sir John Templeton was a wise man. He said, “Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria.” Someday the bear market will have made most investors pessimists. That is the day that a few bulls with fortitude will start buying beaten-down assets. Some will still be skeptical, thinking “I won’t be gullible and buy now!” But more brave souls will start to buy, and some frightened investors will be only too glad to sell and sit on cash. In fact, that is already happening. That is why we have a bear market.
Then, optimism will likely return. Of course, it might not, but history seems to indicate that it will. At some point the doubters and the bearish investors will fear they are missing out on the next leg up. So they will start buying and a bull market will be born. Supply and demand will force prices higher. Most investors will forget the lessons of the bear market and become euphoric in the bull market. Elation and jubilation will cause buying frenzies. Then the bear will return.
Permabears and Permanent Hair Colors
If something is permanent, it will always be. But will it really? I remember as a child my mom would give herself a permanent at home. It smelled awful. The goal was to create some curls (I think) that would be permanent. However, that did not seem to work. It had to be repeated. The same is true of “permanent hair colors.” I’m amused whenever I see General Schwarzkopf’s name because it means “General Black Head.” I am also amused when women buy a brand called Schwartzkopf. I guess I am easily amused.
I am also amused by Permabears. They live a glum life of pessimism. The sky is always falling. A permabear is somebody who is ALWAYS negative about the future direction of the markets and economy, no matter what. That, I believe, is insanity. I have already seen one post that has declared that this market is the final downturn and is biblical in nature. Oh really? I rather doubt it. (Someday a permanbear prediction will come true!)
When Will the Current Bear Market End?
As investors, there is no way to predict the future. No one can do that with the exception of God. He doesn’t have to predict the future because he is Sovereign over history. So I don’t know when or if the current bear market will end. Perhaps it won’t. Perhaps we are on the final journey down and the Apostle John’s book of Revelation will play out.
Some choose to see each major crisis as “the end of the world.” Usually they are wrong. So I like bear markets for the opportunities they present. However, those opportunities are usually short-lived.
In my next bear market post, I plan to talk about another reason I love bear markets. Until then, I suggest you keep reinvesting your dividends. The bear, I believe, will die.
Know Your Flocks & Herds 