Broker Check

Where do stocks go from here?

| May 20, 2022

Where do stocks go from here?  Using the history of bear markets as a guide I pieced together a road map of what to be looking for. 

After evaluating bear markets I came up in two categories one of which I term “garden variety” and I separate those from what I call “mega meltdowns”.

There were only three mega meltdowns in the past 100 years.  The Great Depression era, the .com tech bubble of 2000, and the 2008 financial/housing crisis leading to the Great Recession. Those lasted several years and declined much more than a garden variety. 

Garden variety bears on average take roughly a year to find a bottom and a year to recover the losses. If the current bear market is garden variety, then based on those averages (we are ~5 months into it) then we would be looking to bottom sometime at the end of the year or beginning of next with a full recovery around the end of next year.

What to do now?  Stay diversified.  Consider rebalancing.  Wait for the recovery. Learn more here.

Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.