The bear market is coming
The bear market, when it comes, will be especially painful.
That’s because more and more stock-market timers are treating pullbacks as a buying opportunity
The textbook illustration of why this pattern is dangerous comes from the top of the dot-com bubble in early 2000.
That was definitely a period of irrational exuberance, you may recall, fueled by the stock market’s extraordinary rise in the late 1990s, in which every pullback was indeed a buying opportunity.
So when the market did top out in March 2000, most market timers were confident that this decline would be yet another great occasion to increase their equity stake.
Incredibly, at the point when the market had declined 10% from its all-time high, the average recommended equity-exposure level among market timers focusing on the Nasdaq was higher than it was at that top.
That was irrational exuberance.
We know that the stock market will not keep going up forever.
Contrarian analysis suggests that the top could happen at any time and that, when it does, the decline could be particularly deep and painful.
Mark Hulbert MarketWatch 5 November 2024
https://www.marketwatch.com/story/the-bear-market-is-coming-and-its-going-to-be-painful-3380e5fa
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