Bear Markets Can be a Long, Grinding Experience
By Jon Aldrich
I vividly remember the summer and Fall of 2008, all the way into March of 2009. The Great Financial Crisis was playing out in ways that shaped our lives forever. The markets were in freefall, and you could cut the gloom and doom with a knife. It was everywhere. Watching the news was depressing, despair was rampant and you wondered if there would ever be any good news again. But we got through it.
Scroll back a few years before this. Remember the 2000-2002 internet bubble crash? Stocks went down for almost 3 years in this period. Bad news was in vogue, and it shares a lot of similarities with the current period, just substitute Bitcoin, meme stocks and SPAC’s for internet stocks. History often repeats itself but just takes different forms. It was a long 3 years, but we got through it.
Before this, you had the great crash of 1987. I was in college, so I didn’t feel all the full financial ramifications of the one day crash of 22.6% and overall drop of about 34% when all was said and done. But we did discuss it in detail in my business classes and I remember watching the old Financial News Network, the precursor to CNBS and hearing all the negativity and that things would never recover, etc. In college, though, at least the parties kept occurring and the kegs kept flowing, and we all got through it. But for our parents, it was probably a lot more nerve-racking.
And if you want to really go back in the way-back machine, the grinding bear market of 1972-73 was a doozy that lasted over 2 years and the stock market dropped 45%. I vividly remember my parents watching the Evening News with Walter Cronkite and how he kept talking about something going on in Vietnam, which I had no clue about and how much the Dow had dropped and show the primitive chart with the arrow pointing down. He would finish the broadcast with those famous words he used to end every broadcast that stick with me to this day “And that’s the way it is.” This was another long couple of years, but we got through it.
I could also go on and on about the other corrections and bear markets we have endured over the years, but in many of them, the theme is the same. It’s no fun, but we got through it.
It really sounds very similar to how things feel right now. There just is not any good news. We have war in Ukraine, high inflation, a divided country, supply chain disruptions, you can go on and on. But if you went back and read the headlines from all those other periods I mentioned above or had a time machine and could experience those times (Really sounds like a lot of fun, right?) you would see a host of similar problems that, at the time, felt like we would never get through them. But we got through it.
We are in challenging times right now, and it will probably take some time to sort out. We cannot really count on the sharp snapback like we had after the COVID crash, which was over before you could catch your breath. Most bear markets don’t work that way. They are a long and grinding process that takes time to sort out. Bear Markets have a tendency of making you want to just give up on investing. And usually, right about that time is when things turn around.
But, for those that can keep their composure and soldier through all the muck and negativity, there are rewards. There are no free lunches, there are no shortcuts, you have to pay your dues, but if you persevere and stick to your plan there will be good times again, but you have to be patient. Sure, some of us may have to make some sacrifices, and tighten our belts for a while, but life is about compromises sometimes.
In times like these, remember the things you have that are positive. Of how well things are for you and your family. To, as they say, “count your blessings”. You may be surprised at how long the list of positives are. Focus on the positives! We will get through this as well!