The anatomy of bull markets since 2009 differs greatly among regions. GS did a good job deciphering the drivers of rising equity markets in different countries, which show the contribution of both valuation (P/E i.e. investor psychology) and fundamentals (i.e. real corporate profits).
Bear markets (BM) are painful. Since the 50s, US bear markets have resulted in an average loss of 31% (most painful were Oct-07 at 57%, Mar-00 at 49% and Jan-73 at 48%).
Of course, timing the market is futile and doesn’t help the investor over the long run. It’s more important to have a clear view on the value of any financial asset and seize it when it trades with a margin of safety.
But understanding the market dynamics and the financial environment might be helpful, especially if you want to be able to take advantage of the next downturn.
Goldman Sachs published an in-depth report on the characteristics of bear markets and what signals investors should track to try and anticipate them.
The S&P 500 has gone 10 months without a 3%+ selloff. It’s the third longest since world war II. But the conditions for such a pullback are getting in place.
According to Deutsche Bank’s strategists, a number of facts should have investors worried about potential market correction in the coming weeks/months.