Will We Have A Bear Market In 2019?

bear market 2019

Photo: Eve Livesey.  

Good morning.

“Are we in a bear market?”

“What should I do if we’re in a bear market?”

As the end of the year approaches, you will start to see many financial newsletters calling for a bear market in 2019…especially considering the way the second half of this year has gone.

Throw in the potential Fed rate hikes, as well as the trade spat with China (reportedly resolved as of yesterday, but who knows?), and you have a recipe for a recession – which could lead to a bear market.

The truth of the matter is that no one knows for sure as to what next year will bring.  I wouldn’t be surprised to see the market continue to move higher, and a bear market wouldn’t shock me either.

The last bear market we had was between 2008 and 2009.  It lasted for 15 months.  Since the 1930s, the U.S. stock market has had eight bear markets, lasting 1.4 years on average.

So what should you do if there’s a bear market?

It depends.  If you need your money in the next three years, you should probably take it out of the market.  If this year has taught you anything, it’s that you never know when a market sell-off is going to happen.

If your time frame is more long-term, which I hope is the case, then do nothing.  If you are a regular investor, and you have a fixed amount that you invest each month, then continue to do so.  If we have a bear market, you will have bought stocks at some very good prices.  Do not listen to the pundits that tell people to jump in and out of the market because they believe a bear market is coming.  I said it before and I’ll say it again: it is impossible to successfully time the market.

We here at Wealthy Joe are long-term investors.  We don’t let a sell-off or bear market scare us out of owning great businesses for the long term.

 

How Long Do Stock Market Corrections Last?

Hi, friends.  A short post this evening, as we in the U.S. ease into the Thanksgiving holiday…

So…corrections.  What are they?  Are we in the midst of one?  How long do they last?

The definition of a correction is when a stock market average drops by 10% from its high.

Currently the Dow is down around 7%, the S&P 500 is down 8.5%, and the NASDAQ is down 13%.  So yes – we are in what can be termed a correction.

How long can we expect this downturn to last?  It’s impossible to know for sure, but if history is our guide, the typical correction lasts three to four months.  When you consider that the market peaked in late August, we will probably be in sell mode for the rest of the year.

Stay the course.  Buy and hold.  You’ll be glad you did!

I wish all of those celebrating a happy and safe Thanksgiving Day!

 

The Wall Of Worry Will Continue To Climb!

“Wall of worry”?  What’s that?

A wall of worry is when the market advances exponentially over a period of time, defying so-called conventional wisdom.

The wall of worry has watched the Dow go from 22,000 to almost 27,000 over the past five years.

Today, we are still adding bricks to this wall in the form of a trade war with China, rising interest rates, higher wages, emerging market instability, and a bull market in its late innings.

So…what is an investor to do?

Here’s something very few people are talking about:

What if the bull market didn’t start until 2016?

What if we are, in fact, at the beginning stages of one of the greatest bull markets in history?

On the other hand, I have seen commentary from some of the best investors on the planet who believe the easy money has already been made.

They may be right.  But what if they’re wrong?

If they’re wrong, a lot of people are going to be caught off guard and scurry to get back into stocks, pushing the market much higher.   In that case, we could see the Dow triple over the next five to ten years.

If they are right, it makes no difference to me.  Because I’m invested for the long haul.  And so should you be.

 

Is It Safe To Buy Again?

The answer to this question is:

You should always be buying!!!

Let’s say, for example, you decided to invest $100 a month.  This technique is called dollar cost averaging.

By doing this, you will buy when prices are high, as well as when prices fall.

Over time, as your investment rises in value, the growth you experience can be exponential!  This is because you were buying when markets were down – and that can supercharge your growth.

If you are like me, and your time frame is 10 to 20 years away…and definitely if it is longer than that…you shouldn’t be the least bit bothered by this sell-off.

To answer the question “Is it safe to buy again?”

My answer is yes, yes, yes!