Sometimes there is a bull market. Sometimes there is a bear market. Are either of these markets “good” or “bad”?
Let’s Look
When we think of a bull market, we think rising prices. We think about people making money. We think about happy, positive people.
When we think of a bear market, we think declining prices. We think about people losing money. We think unhappy, negative people.
Only Thinking Makes It So
About those bear markets. We’re all familiar with the aphorism “Buy Low, Sell High.” And when are prices “low”? During a bear market.
So a bear market is the time and place to find low prices. Since it is in the best interest for one to buy when prices are low, then bear markets are the place to be. Bear markets make opportunities real.
The Gift
Bear markets are the special time to find low prices. prices and valuations. Do we recall during the previous bull market, it became harder and harder to find bargains because of the richness of valuations?
Quote
We recall a quote previously repeated:
“I had never experienced a depression before. But even then I began to grasp dimly that the period of emergence from a depression provides rare opportunities for financial profit.” –Bernard Baruch
Substitute “bear market” for “depression” in that quote, and you have the point. (And of course, depressions are truly bear markets.)
Another Story
A well-told story about John Templeton. In 1939, when World War II broke out, he instructed his broker to purchase 100 shares of each NYSE-listed company which was then selling for less than $1 a share. How much fortitude and strength do we have in face of purportedly bad news? Templeton became very rich when the U.S. geared up for the war effort.
Waiting Game
Hesitations can happen in bear or bull markets. Will it go lower, will it go higher? What if it goes lower? What if it goes higher?
Now and Then
What to do when there is no bear market? The same experience applies. This is where statistics and history have some role to play.
No stock chart or historical information can protect an investor from all possibilities. Market move at their own pace; sometimes glacially, sometimes too rapidly. We have no control. WWe can do what we can, and that is all.
Something or Nothing
I am not a day trader, nor do I like to join speculators in every activity. I buy for dividend income, expecting that over time my dividends will grow and compound. That is what has happened so far. And all indications are that it will continue.
When I started investing, I was keen to get in the game, and paid less attention to valuations and historical ranges. Now, I let those metrics–valuations and historical data help guide me. Since dividends, especially with dividend reinvestment, are continually growing my income and assets, I have the comfort to wait for the prices I desire. Occasionally, I get an itchy trigger finger, but that usually passes when I look at my target prices for the stocks I own.
Where do you stand? Let me know here.
The illustration is from 1799 and appeared in the French magazine Le Mois.
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