There are shares on NZX that are already up over 20% from their recent lows. Doesn't mean you bought the low, or sold for the profit, or that it won't go back down there, or even go lower.
Printable View
There are shares on NZX that are already up over 20% from their recent lows. Doesn't mean you bought the low, or sold for the profit, or that it won't go back down there, or even go lower.
From WSJ
You Can’t Predict When Bear Markets End. So Don’t Try.
Investors are better off controlling what they can control
JASON ZWEIG · Jul 9, 2022
Part of what makes bear markets so unbearable is that nobody—and I mean nobody—knows when or how they will end.
That doesn’t stop everyone on Wall Street from flogging measures, hunches and folklore purporting to foretell when stocks will finally stop falling.
However, intelligent investors don’t bother trying to predict the unpredictable; they focus on controlling the controllable. That’s the psychological key to surviving this—and any—bear market, no matter how long it lasts.
To see clearly why it’s so important to get your priorities straight, let’s look quickly at three beliefs about when bear markets end.
Ask any market veteran when stocks will start to recover, and you’re likely to hear something like this: Bear markets don’t end until individual investors throw in the towel, fear hits new heights or stocks finally get cheap again.
Taking each in turn, here’s why they’re myths.
Retail investors have to capitulate. Financial professionals love to argue that bear markets hit bottom when individual investors give up on stocks in a crescendo or “capitulation” of panic selling.
Only trouble is, that isn’t what happened in 1932, 1974, 1982 or 2002, among many examples. Bear markets sometimes end in a selling frenzy, but they often end in an indifferent stupor.
Fear has to spike. Many professionals contend that the Cboe Volatility Index, or VIX, is “too low” right now, says Nicholas Colas, cofounder of DataTrek Research, an investment newsletter in New York.
The VIX, commonly called Wall Street’s “fear gauge,” spiked to then-record highs in October 2008, during the global financial crisis— but stocks still fell more than 19% before the bear market finally ended in March 2009.
“When markets are trying to reprice their expectations of the future, they only nibble away at that truth,” says Mr. Colas. No single indicator like the VIX can capture the moment when those expectations are about to shift.
Stocks have to get a lot cheaper. Many investors believe bear markets end only after formerly overvalued stocks finally become bargains again.
It just isn’t so.
In March 2009, in the pit of the global financial crisis, stocks traded at more than 13 times their longer-term earnings, adjusted for inflation, according to data from Yale University finance professor Robert Shiller. That was only about 20% cheaper than the average all the way back to 1881.
Although stocks didn’t seem like a statistical bargain at the time, they went on to gain roughly 15% annually over the next decade.
All this shows the folly of trying to figure out when stocks have hit bottom.