The US Bear Market Opportunity

May 9, 2022

It doesn’t feel like March 2020 when Covid first hit us and the world closed its doors. It doesn’t feel like 2008-2009 when we had a mortgage meltdown and major stock market corrections. It still doesn’t feel like 2000-2002 when we had the “tech-wreck” and a Nasdaq meltdown, although some technology stocks are down by 60% or so in the last eight months. 

What does this mean for investors?

Investors, however, who are either growth-oriented or income-oriented, have experienced 10% to 30% corrections in their portfolios – a most painful event. Even the most conservative bond investor has seen a 10% correction in some cases, with interest rates moving up to combat an 8%+ inflation rate. 

Let’s put this in perspective.

Here are the numbers through Friday, May 6th from the peak in 2021:

NASDAQ Composite-27%
DOW Index – 7%
S & P 500 Index-16%
Russell 2000 -27%
Bitcoin-51%
Price of a barrel of oil +249%

So, should investors be scared? Of course.

These are challenging and painful times to be invested in.

Should investors be optimistic about the future? Definitely!  

It is during bear markets and recessionary times that we find all types of opportunities for future investing. Plus, there’s an opportunity for companies that we should not be invested in to shake out, perhaps merge into other companies, or cease to exist. For example, we are invested today significantly in the energy sector which is a sector we didn’t want anything to do with just a few years ago. 

Behavioral Finance and Your Investment Strategy

Behavioral Finance is the study of how investors react to economic and political times.  Based on many studies, the average investor does exactly the opposite of what the best investors do. These actions are in their personal worst interest.

When we experience times like this, when there are stock market corrections, it presents a buying opportunity as many good companies are now “on sale.” On the contrary, so many investors buy when everything is going up and sell when everything is going down. 

We urge you to employ the best practices of the best investors, which is to find opportunities and remain a long-term investor. We have re-done our investor’s portfolios to take advantage of these opportunities without completely blowing out the American tech sector which will at some time bounce back with a fury as it is mostly oversold.  

Please feel welcome to call me anytime.

Let’s set up a Zoom meeting if you have any questions about how to use your investment strategy to find new opportunities. 

All my best,

Elliot Kallen

925-314-8503

[email protected]

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