Source: YCharts

As you can see the S&P 500 and Dow have yet to officially enter bear market territory, but by every other measure we are in a bear market. For even the most stalwart, a bear market will put you on edge. My colleagues at Ritholtz Wealth Management have been on a roll this past week writing about what is happening and how you should react. Here is a sampling.

The State of Things

“We’re in a rangebound market. One day the Dow Jones is up 800 points, the next day it’s down 1,000. The world we live in did not suddenly lurch from one condition to another in a 24 hour span. That’s pure emotion.” – Joshua Brown

“In good markets, investors value growth. In bad markets, investors focus on survival. And that’s where we are today.” – Michael Batnick

“What is going on in 2022? Perhaps it’s nothing more complex than mean reversion. If you prefer to contextualize this in terms of adjusting to a new rate regime or a future increase in the cost of capital, well sure, whatever narrative explanation works for you.” – Barry Ritholtz

In every bear market, it feels like the end of the world is near while it’s happening…Things seem bleak right now. The stock market wouldn’t be falling if things were fine. It’s always this way though.” – Ben Carlson

“There has been way too much exuberance in financial markets over the past 5 years. It’s time to flush it out. Flush it all out.” – Blair duQuesnay


“Sentiment readings can be fantastic contrary indicators, but they are rarely actionable, and then only when at extremes.” – Barry Ritholtz

“Are things really that bad? Looking at some of the sentiment data, you would think the unemployment is 10% and the stock market is down 50%.” – Michael Batnick

“Bear markets function as full-body cleansers for investors’ psyches.” – Tony Isola

Lessons Learned

“Diversification is the only answer to an unpredictable future. If everything is working, you’re not really diversified.” – Michael Batnick

“The most important thing right now is not to panic and to stick to your plan, assuming you had one. But every market environment presents an opportunity to do something to improve your portfolio or your total financial picture. These actions can help scratch the urge to DO SOMETHING to ease the pain of seeing red on your statements.” – Blair duQuesnay

“Fill your head with junk and it all but guarantees future behavioral mistakes.  Reducing your consumption of the worst kinds of media will go a long way towards better results of all kinds.” – Barry Ritholtz

“Nothings fixed. Bull markets arrive and pass. Bear markets burst onto the scene and eventually flame out, and so it goes. Change is your friend regarding the stock market. Bull markets last much longer.” – Tony Isola

“The problem is trying harder does not guarantee better results. Doing more offers the illusion of control but often hurts performance more than it helps, especially when emotions are running high.” – Ben Carlson

Startups and Crypto

“This is a good time for self-reflection. Maybe you weren’t a business genius all this time. Maybe you just stumbled into a moment where capital was free and flowing like wine at a wedding. ” – Joshua Brown

“Looking back now it seems so obvious that valuations of speculative cryptocurrencies and high growth tech stocks would collapse. The prices made no sense and we all knew they made no sense. But, in the moment, it’s hard to imagine how everything could come undone. It’s hard to imagine when everyone would wake up. But, they always do.” – Nick Maggiulli

The Economy

“The point here is recessions don’t always have to mean the world is coming to an end. Sometimes the U.S. economy just needs a pit stop. Every time inflation spikes it doesn’t mean it has to be a repeat of the 1970s or the onset of hyperinflation. Sometimes all it takes is a minor recession to reset prices.” – Ben Carlson

“It doesn’t take a genius to figure out why the stock market tends to fall a lot during a collapse in economic growth.” – Ben Carlson


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