â€œBearâ€-ing the MarketOct 5 2011
As stocks continue to decline and push markets down 20% from the past spring, we find ourselves in a bear market. But how did we get here and how do we put this bear back into hibernation?
Well, like the ones before, we’ve entered this bear market because our fears have dominated the fundamentals. Yes, your fears have overshadowed the hard facts of what’s really happening. The two major concerns affecting the market: high government debt (especially in Europe) and a slow economic growth, leading into a possible recession.
But let’s look at the facts. Greece, the center of concerns for European debt, has been dominating the news almost daily. With fear increasing and everyone begging for a solution, the markets begin to react poorly. However, there is no quick fix to Greece and policy makers are in the process of creating a solution, slowly. The market moves quickly though and never likes waiting around for slow political decisions.
In addition, our fears have grown so much, that encouraging data is going unnoticed! Better-than-expected U.S. economic news was released this month, revealing that manufacturing activity increased in September. What does this mean? It means that the economy is slowly growing and not moving towards a recession.
So how do we put this bear market to sleep and survive the poor markets? By remembering that bear markets are normal and happen regularly (usually every 3-4 years). Bear markets are rarely as severe as 2008. All we need is patience, discipline and a little control over our emotions.