Bear Markets

All those young investors who have never tasted the bitter taste of a bear market are about to get a nasty surprise when they see their accounts at the end of this month.  The market fell through long-term support in the middle of last week and now could plummet to any level lower.  Eventually you can expect sharp, short covering rallies that, when they hit their peaks, will then collapse very sharply to new lows, as most of the buyers propelling such rallies were not longs but rather shorts just covering their positions.  You can trade bear market rallies but you don’t want to be long in them.  Bear markets are a lot more treacherous than bull markets.  You have to know what you are doing in bear markets.  If you don’t, stay in cash or CDs.  Not bonds this time, as bonds are in a bigger bubble than stocks.

Will be interesting to see if gold finally wakes up from its long hibernation.  Oil and commodities in general are dead in the water.

My Story