Bear markets are the time to bone up on investing models to outperform - especially on the rebound. Here's a quote from a research paper by Daniel Rasmussen
https://static1.squarespace.com/stat...sers+Ebook.pdf
"Tolstoy wrote in Anna Karenina, “happy families are all alike;every unhappy family is unhappy in its own way.”Markets are the opposite. Bull markets are all bullish in theirown ways. The leaders in one expansion are almost neverthe leaders in the next. In the 2000s, companies withexposure to emerging markets and commodities were thebiggest winners. In the 2010s, the FANG stocks and othertechnology companies drove the market expansion. It’shard to predict what investors will fall in love with in a bullmarket.
But
crises are alike. A recent academic study found that
standard models for predicting returns in equity marketsare 8x as predictive during recessions as duringexpansions. Take, for example, the classic factors thatNobel Prize winner Eugene Fama and his research partnerKen French developed: size, value, and investment. Thesmallest decile of stocks (SMB), the cheapest decile ofstocks (HML), and the most conservative capitaldeployment decile of stocks (CMA) perform much betterduring crises and with much higher consistency than atother times."
A key thing to remember is that - if you buy to hold medium-long term, volatility is not synonymous with risk. There are small caps with huge price fluctuations - and enormous drops recently - with rock solid balance sheets and sticky growing ARRs...
Another key point for me is the way world markets follow the US. I see the recessionary risk in Australia as much lower, and the bargains among high quality micro-caps 'thrown out with the bath water' now are incredible...