At The Wall Street Journal, Spencer Jakab quotes the character of Clemenza from “The Godfather” discussing mob violence, saying, “These things gotta happen every five years or so, ten years. Helps to get rid of the bad blood…been ten years since the last one.”
Jakab is comparing the mob violence to a bear market. He writes:
There’s no saying when the next major bear market will send Americans to the mattresses—maybe through the collapse of AI mania, or possibly just a garden-variety recession. There have only been minor scrapes the past 16 years, and that’s actually a problem.
A downturn like 2007-09 when U.S. stocks fell by more than half can be both awful and therapeutic. It took 66 months for the S&P 500 to regain its previous high. Investors with a long-term perspective pounced on what in hindsight were solid, boring bargains near the bottom.
The five brief downturns since then that met the unofficial definition of a bear market taught the opposite lesson. Momentarily terrifying, they encouraged investors to “buy the dip” quickly and recklessly—the junkier the stocks, the better.
Is there anything therapeutic about being a new retiree during a long bear market? Imagine retiring just before the blowups of 2000 or 2007 and plan accordingly. You don’t want to get caught in one of the deadliest markets this century.
Action Line: When you want to talk about your portfolio, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
