Revealed: Here's The Perfect Time To
Buy Stocks In 2019
Even though stocks have gained more than 5% since bottoming in late
The 5.3% jump since the start of 2019 isn’t the result of fundamentals (those
haven’t changed), new news (there haven’t been any significant
developments) or an end to political gridlock (the shutdown has remained in
effect). Instead, it’s been a clearly psychological change: with the new year,
the market has a new attitude.
When it comes to short-term trends, psychology is by far the most important
factor. People sell when they panic and buy when they’re greedy—which is
why the contrarian, seeking long-term profits and a stable income stream,
does the opposite and buys when people panic (because they’re overselling
cheap assets) and sells when people are greedy (because they’re overbidding
assets beyond their true value).
And that’s the biggest reason why bear markets aren’t to be feared—they’re
to be embraced in a bear hug your portfolio will eventually enjoy.
Another Reason to Love the Bears
That isn’t the only reason to not fear bear markets, however. There’s one key
factor you should cling to during every downturn—and take into account
when you’re on the hunt for contrarian bargains: the length of a bear market.
First, the facts.
On average, bear markets have lasted 14 months from beginning to end since
World War II, with the average decline being 33% from top to bottom.
However, on average, bear markets have recovered to their pre-bear-market
high in an average of 14 months—meaning that the average investor who
ignores short-term volatility will find that their portfolio get more info fully recovered in
about as much time as they saw it weaken.
Let’s dig deeper. Since 1945, we have had a total of nine bear markets with
an average 35.8% decline among them. Also, unsurprisingly, the longer the
bear market, the deeper the decline.
Note how the biggest decline click here of them all was the most recent: the 2007–09
Great Recession is the sort of once-in-a-lifetime event we aren’t likely to see
again check here anytime soon. That didn’t stop many Americans from get more info bailing on stocks
during its depths, meaning they missed out on the 48 months of recovery
that followed it and the 290% gains more info in the decade since!
Of course, we can’t only buy stocks when they’re at their weakest—but every
bear market is a clear buying opportunity, because it’ll take just about a year
for the market to recover to its pre-bear-market levels—which means
massive profits for people who bought when stocks were at their bear-market