Correction vs. Prolonged Bear Market

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3funder
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Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 8:10 am

I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.

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Toons
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Re: Correction vs. Prolonged Bear Market

Post by Toons » Tue Feb 13, 2018 8:16 am

I certainly have no idea what the future will bring.
Maybe someone else does.
Just invest and stay fixed on your financial destination.
If you are investing for your future retirement
and investing consistenlty,
A prolonged bear market is Your Ally.


8-)
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

RRAAYY3
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Re: Correction vs. Prolonged Bear Market

Post by RRAAYY3 » Tue Feb 13, 2018 8:18 am

3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I only worry about what I can control : My savings rate

Prolonged bear market: Cool, cheaper shares and laughable media hysterics.

No prolonged bear market: Cool, my balance is going up.

Done and done

3funder
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Re: Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 8:21 am

Toons wrote:
Tue Feb 13, 2018 8:16 am
I certainly have no idea what the future will bring.
Maybe someone else does.
Just invest and stay fixed on your financial destination.
If you are investing for your future retirement
and investing consistenlty,
A prolonged bear market is Your Ally.

8-)
Thank you. I feel I must clarify further. I'm most interested in hearing about this from a theoretical perspective. No thoughts on marking timing whatsoever. I'm familiar with happened from the late 60s through the early 80s. In other words, given the structure of our economy, etc, is this a generally feasible event? No near-term predictions needed.

RRAAYY3
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Re: Correction vs. Prolonged Bear Market

Post by RRAAYY3 » Tue Feb 13, 2018 8:33 am

One more reason I’m 50/50 US/Int’l

I don’t have much faith in the US currently - I’ll just leave it at that.

3funder
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Re: Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 8:33 am

RRAAYY3 wrote:
Tue Feb 13, 2018 8:18 am
3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I only worry about what I can control : My savings rate

Prolonged bear market: Cool, cheaper shares and laughable media hysterics.

No prolonged bear market: Cool, my balance is going up.

Done and done
Thanks. I maintain a high savings rate among tax-advantaged, taxable, money market, and checking. I'm actually a little sick of the US stock market run-up, and, at my age (33), I'd really like to see a prolonged bear market to take advantage of lower prices. My employment is very stable (tenured public school teacher in one of the largest, wealthiest districts in the country). My mortgage will be paid off by the time I'm 40 (currently, $53k @3.5%). No other debt. Have already paid for big ticket items, such as minivan and kitchen remodel and still have $50k set aside in liquid slush fund (Cap One 360 money market account yielding 1.4%).

david1082b
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Re: Correction vs. Prolonged Bear Market

Post by david1082b » Tue Feb 13, 2018 8:34 am

A prolonged bear market is guaranteed at some point, judging by history, it would be absurd to deny the idea imo. The chance is never less than 100% since it's just something that happens sometimes.

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oldcomputerguy
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Re: Correction vs. Prolonged Bear Market

Post by oldcomputerguy » Tue Feb 13, 2018 8:36 am

3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US?
I'm 100% confident that a bear market will happen. As to when, or how long it will last, sorry, my crystal ball isn't working very well this morning.
:wink:
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

3funder
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Re: Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 8:37 am

RRAAYY3 wrote:
Tue Feb 13, 2018 8:33 am
One more reason I’m 50/50 US/Int’l

I don’t have much faith in the US currently - I’ll just leave it at that.
Yes; I'm 60/40 US/Int'l. I'm only comfortable with a small home country bias.
Last edited by 3funder on Tue Feb 13, 2018 8:47 am, edited 1 time in total.

RRAAYY3
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Re: Correction vs. Prolonged Bear Market

Post by RRAAYY3 » Tue Feb 13, 2018 8:46 am

3funder wrote:
Tue Feb 13, 2018 8:33 am
RRAAYY3 wrote:
Tue Feb 13, 2018 8:18 am
3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I only worry about what I can control : My savings rate

Prolonged bear market: Cool, cheaper shares and laughable media hysterics.

No prolonged bear market: Cool, my balance is going up.

Done and done
Thanks. I maintain a high savings rate among tax-advantaged, taxable, money market, and checking. I'm actually a little sick of the US stock market run-up, and, at my age (33), I'd really like to see a prolonged bear market to take advantage of lower prices. My employment is very stable (tenured public school teacher in one of the largest, wealthiest districts in the country). My mortgage will be paid off by the time I'm 40 (currently, $53k @3.5%). No other debt. Have already paid for big ticket items, such as minivan and kitchen remodel and still have $50k set aside in liquid slush fund (Cap One 360 money market account yielding 1.4%).
You’re golden. Stay invested - often the best returns happen after the worst returns, start pumping more into taxable account once mortgage is paid off, look at it in 20 years

RRAAYY3
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Re: Correction vs. Prolonged Bear Market

Post by RRAAYY3 » Tue Feb 13, 2018 8:49 am

david1082b wrote:
Tue Feb 13, 2018 8:34 am
A prolonged bear market is guaranteed at some point, judging by history, it would be absurd to deny the idea imo. The chance is never less than 100% since it's just something that happens sometimes.
It’ll happen - the problem is will it happen after another 20+% rise ?

I bought at the literal market peak last March - it’s still up after this recent “meltdown”. Psychologically it was harder to buy at the peak - but I learned pretty quickly that time in > timing

3funder
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Re: Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 8:53 am

RRAAYY3 wrote:
Tue Feb 13, 2018 8:46 am
3funder wrote:
Tue Feb 13, 2018 8:33 am
RRAAYY3 wrote:
Tue Feb 13, 2018 8:18 am
3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I only worry about what I can control : My savings rate

Prolonged bear market: Cool, cheaper shares and laughable media hysterics.

No prolonged bear market: Cool, my balance is going up.

Done and done
Thanks. I maintain a high savings rate among tax-advantaged, taxable, money market, and checking. I'm actually a little sick of the US stock market run-up, and, at my age (33), I'd really like to see a prolonged bear market to take advantage of lower prices. My employment is very stable (tenured public school teacher in one of the largest, wealthiest districts in the country). My mortgage will be paid off by the time I'm 40 (currently, $53k @3.5%). No other debt. Have already paid for big ticket items, such as minivan and kitchen remodel and still have $50k set aside in liquid slush fund (Cap One 360 money market account yielding 1.4%).
You’re golden. Stay invested - often the best returns happen after the worst returns, start pumping more into taxable account once mortgage is paid off, look at it in 20 years
I appreciate your feedback. I have very little in taxable (a little over $3,000 in VGTSX), so I do need to invest more. Once US valuations calm down, I'll probably invest $3,000 in VTSMX as well. Since taxable is much more accessible and isn't earmarked solely for retirement, I don't want to invest in VTSMX at such a high price; I maintain my overall AA by holding it in tax-advantaged.

RRAAYY3
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Re: Correction vs. Prolonged Bear Market

Post by RRAAYY3 » Tue Feb 13, 2018 8:57 am

Time In > Timing

I literally bought the US last March at the all time high (as in, no one ever paid more than me ever). Even after this downturn - that balance is still up.

Another 10% decline may occur ... but if it’s after a %15 increase it won’t matter ... I’d probably pay off the mortgage faster (guaranteed return) if possible than look into taxable

* taxable is part of my retirement plan, so every dollar I put in I know won’t be touched for 20 years. These current valuations / fluctuations will be forgotten long before then - I’m also 50/50 blend of Us / Int’l *

3funder
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Re: Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 9:04 am

I've considered paying off the mortgage faster; however, my wife and I have approximately $7k worth of flooring to repair/install, and she likes having a cushy cash buffer. We could also use some of the money to fund our son's 529 more aggressively, so she'd only be ok with me investing $3,000 in VTSMX if it was a better value.

staythecourse
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Re: Correction vs. Prolonged Bear Market

Post by staythecourse » Tue Feb 13, 2018 9:06 am

3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I'm curious have you asked about a possibility of a bear market before the most recent stock drop? If not, don't you think it is incredible coincidence you ask same time the market is stinking it up?

Nothing wrong with admitting you (or anyone) get a bit nervous when the market plunges. Accepting it is normal is the key NOT acting like it doesn't bother you.

To answer your question, NO ONE accurately predicts a bear market. Even the government folks don't predict it and only label it in retrospect after it is all done. That should tell you something.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

3funder
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Re: Correction vs. Prolonged Bear Market

Post by 3funder » Tue Feb 13, 2018 9:13 am

staythecourse wrote:
Tue Feb 13, 2018 9:06 am
3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I'm curious have you asked about a possibility of a bear market before the most recent stock drop? If not, don't you think it is incredible coincidence you ask same time the market is stinking it up?

Nothing wrong with admitting you (or anyone) get a bit nervous when the market plunges. Accepting it is normal is the key NOT acting like it doesn't bother you.

To answer your question, NO ONE accurately predicts a bear market. Even the government folks don't predict it and only label it in retrospect after it is all done. That should tell you something.

Good luck.
I asked myself about the possibility a few years ago, as that was when I started to desire a prolonged bear market. I simply didn't feel like posting, as I rarely start new threads. I feel no discomfort whatsoever regarding the correction; in fact, I'm disappointed the indexes haven't continued to plummet. Again, though, I'm not seeking a prediction. I'm seeking thoughts on the general likelihood of it happening again in this country at any given time.

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greg24
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Re: Correction vs. Prolonged Bear Market

Post by greg24 » Tue Feb 13, 2018 9:19 am

RRAAYY3 wrote:
Tue Feb 13, 2018 8:18 am
I only worry about what I can control : My savings rate

Prolonged bear market: Cool, cheaper shares and laughable media hysterics.

No prolonged bear market: Cool, my balance is going up.
Very well said. Take the long term view, and just keep plugging away.

halfnine
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Re: Correction vs. Prolonged Bear Market

Post by halfnine » Tue Feb 13, 2018 9:23 am

I wouldn't be surprised if there was another great depression within my lifetime.

RRAAYY3
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Re: Correction vs. Prolonged Bear Market

Post by RRAAYY3 » Tue Feb 13, 2018 9:27 am

What I find most amusing is the hysteria around another crash due to inflation blah blah blah and yet the Fed is blatantly saying they will be cautious and do everything methodically so as to not stir things up too much

And yet, the hysteria ensues. “Dow to open down triple digits!” “Bonds to crash!”

I’m glad I find it amusing

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SVariance1
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Re: Correction vs. Prolonged Bear Market

Post by SVariance1 » Tue Feb 13, 2018 9:28 am

I have no idea about the duration of a bear market but my guess would be that its intensity might be more severe than what we experienced in 2008/2009. If your time horizon is long and if risk tolerance is high, this issue should not matter much to you.
Mike

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CyclingDuo
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Re: Correction vs. Prolonged Bear Market

Post by CyclingDuo » Tue Feb 13, 2018 9:32 am

3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
In a typical way, the business cycle dictates bull vs. bear markets. Duration of each phase of the cycle varies, which means the duration of the bull and bear markets vary according to the cycle.

Image

When you asked about the possibility of a prolonged bear market, the duration of it will all depend on how long it takes the peak and recession phase portions of the business cycle to work themselves out. Will the bear market, when it arrives, be an average one at 18 months with a 40% decline? Will it be shorter? Will it be longer? That's all out of our control. It's also out of anyone's ability to answer without a random guess.

All we know revolves around the business cycle continuing to move through phases over and over and over again throughout our investing years.

In addition, we know that bull markets, on average, last 5 times the length of bear markets.
M1 Finance - Set up your Three Fund Portfolio for free using VTI, VXUS, BND!

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Toons
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Re: Correction vs. Prolonged Bear Market

Post by Toons » Tue Feb 13, 2018 10:33 am

3funder wrote:
Tue Feb 13, 2018 8:33 am
RRAAYY3 wrote:
Tue Feb 13, 2018 8:18 am
3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I only worry about what I can control : My savings rate

Prolonged bear market: Cool, cheaper shares and laughable media hysterics.

No prolonged bear market: Cool, my balance is going up.

Done and done
Thanks. I maintain a high savings rate among tax-advantaged, taxable, money market, and checking. I'm actually a little sick of the US stock market run-up, and, at my age (33), I'd really like to see a prolonged bear market to take advantage of lower prices. My employment is very stable (tenured public school teacher in one of the largest, wealthiest districts in the country). My mortgage will be paid off by the time I'm 40 (currently, $53k @3.5%). No other debt. Have already paid for big ticket items, such as minivan and kitchen remodel and still have $50k set aside in liquid slush fund (Cap One 360 money market account yielding 1.4%).
Thanks for clarifying...
Like I said I really have no idea...
maybe others who have more insight to economics
could give you a more definitive answer,
:sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

staythecourse
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Re: Correction vs. Prolonged Bear Market

Post by staythecourse » Tue Feb 13, 2018 2:49 pm

3funder wrote:
Tue Feb 13, 2018 9:13 am
staythecourse wrote:
Tue Feb 13, 2018 9:06 am
3funder wrote:
Tue Feb 13, 2018 8:10 am
I'm curious (and I know there's no hard and fast answer here): What do you all think about the general likelihood of a prolonged bear market in the US? To be clear, I'm not very risk averse (80/20 AA and could tolerate a more aggressive allocation if I felt the need, which I don't), and this has nothing to do with the recent correction, which didn't bother me in the least. Thanks in advance.
I'm curious have you asked about a possibility of a bear market before the most recent stock drop? If not, don't you think it is incredible coincidence you ask same time the market is stinking it up?

Nothing wrong with admitting you (or anyone) get a bit nervous when the market plunges. Accepting it is normal is the key NOT acting like it doesn't bother you.

To answer your question, NO ONE accurately predicts a bear market. Even the government folks don't predict it and only label it in retrospect after it is all done. That should tell you something.

Good luck.
I asked myself about the possibility a few years ago, as that was when I started to desire a prolonged bear market. I simply didn't feel like posting, as I rarely start new threads. I feel no discomfort whatsoever regarding the correction; in fact, I'm disappointed the indexes haven't continued to plummet. Again, though, I'm not seeking a prediction. I'm seeking thoughts on the general likelihood of it happening again in this country at any given time.
Okay sounds reasonable. So the answer is no one knows and no one has EVER consistently called expansions and recessions. As mentioned the government doesn't even label it a recession until it is into it as it can not be predicted ahead of time. So knowing that the answer anyone will give you is no use as it has no a very low chance of being accurate ex ante.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

jalbert
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Re: Correction vs. Prolonged Bear Market

Post by jalbert » Tue Feb 13, 2018 4:00 pm

Whether or not we have a so-called bear market will largely be predicated on future (and thus unpredictable) events. If a bear market in the near term could be reliably predicted based on what we know today, investors already would have been heading for the exits, in which case the bear market would have already happened.
Index fund investor since 1987.

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