When can we really say goodbye to this bear market? While Bank of America’s global fund managers are no longer “apocalyptically bearish,” some on Wall Street remain wary.
Add our call of the day to this last batch. It comes from True Contrarian blog and newsletter managing director Steven Jon Kaplan, who sees investors mired in what could be the longest bear market in history, and “closes in on the next and probably the most big drop as a percentage of this bear market so far.”
MarketWatch last spoke with Kaplan in mid-November 2021, when he warned of an impending sell-off in stocks, especially big names. A few days later, the Invesco QQQ QQQ
exchange-traded fund (ETF) that tracks the Nasdaq-100 index, and many other technology funds have risen to the top. The S&P 500 SPX
peak followed on January 4.
Kaplan based that November warning in part on one of his favorite metrics — the company’s insider selling and buying, which he tracks through J3 Information Services Group.
In an interview with MarketWatch on Wednesday, he listed worrisome signals, such as aggressive selling by this group again, individual investors crowding the market, statements that the bear market is over and the Cboe Volatility Index, or VIX VIX,
dropping below 20 years in recent days.
History also plays a big part in his worries about the markets right now.
“It is fascinating to see how close the bear markets of 1929-1932 and 2000-2002 came together, with almost exactly the same types of pullbacks and rebounds. I expect similar behavior for 2022-2025,” he said. (See link to original painting)
Kaplan noted that it took eight years for the 1929 bear market to arrive, almost 10 years for March 2000 and even longer for the bear market he considers ongoing, given that the bull market began in March 2009.
“So what they all have in common is that these very long bull markets preceded bear markets for so long, that people tended to forget how to invest in bear markets and what it was all about. “, did he declare.
The familiar bear market pattern throughout history has been a small dip to begin with that didn’t cause panic, then a soothing bounce, then a bigger dip and a bigger bounce, again relaxing investors. But he said that based on 1929, 1973 or 2000, the next sell-off could result in dramatic losses, such as 40% for a fund like QQQ.
Kaplan worries about Fidelity’s latest quarterly pensions survey, which found investors clinging to hopes the market would return to highs if they waited long enough. Disputing this, Kaplan pointed to another study showing that individuals who invested in the market in September 1929 were still down 38% in August 1982 in real, inflation-adjusted terms.
“It kind of explodes the myth that you have to stand out if you just hang in there when the going gets tough,” he said.
Lily: Most retirement savers ‘stay the course’ – even when totally stressed
So how to deal with another big fall. Repeating November’s advice, he recommends I-Bonds or Series I savings bonds which can be purchased directly from the government and currently offer a yield of just over 9%. US Treasuries are also paying 3% to 3.5% right now, another way forward for years to come, he said.
Lily: Ruler with Perfect Record Indicates Market Hasn’t Bottomed, Says Bank of America Star Analyst
ES00 Equity Futures
edge higher, after Wednesday’s Fed-inspired losses. BX Bond Yields:TMUBMUSD10Y
are easing, while the dollar DXY
is flat. CL Oil Price
climb, and bitcoin BTCUSD
hovers below $24,000.
Lily: Why an economist fears the Japanese yen is headed for a destabilizing downward spiral
Bed Bath & Beyond BBBY Actions,
who’s been doing a crazy meme ride lately, crashes after GameStop GME
Chairman Ryan Cohen has revealed plans to offload his large stake in the retailer months after buying it. The company said on Thursday it had been “working quickly” for weeks to strengthen its balance sheet
Meanwhile, the 20-year-old made a massive profit on the stock, according to documents filed by the Securities and Exchange Commission.
Kohl’s KSS Retailer
is collapsing after a shortfall and reduced outlook amid plans to reduce inventory volume
Shares climb after the tech giant’s surprisingly upbeat earnings and earnings forecasts.
plans to unveil its latest iPhone 14 and smartwatches on September 7, according to a new report.
“End of an era.” Stellantis STLA
Dodge unit to ditch two popular “muscle cars” as it moves toward electric vehicles.
Unemployment insurance claims fell 2,000 to 250,000 last week, while the Philadelphia Fed index rose to 6.2 from an expected negative 5.0. Existing home sales and major economic indicators are yet to come, along with appearances from Kansas City Fed President Esther George, who will speak at 1:20 p.m. Neel Kashkari, Fed President of the East and Minneapolis, at 1:45 p.m.
The best of the web
Big Oil is overly optimistic a slow transition away from carbon will be enough to stop global warming
Two years after Covid infections, risks of psychotic disorders and dementia persist
Kremlin Reportedly Ousted Chief Of Its Black Sea Fleet Following Attacks In Crimea
Here are the most searched tickers on MarketWatch as of 6 a.m. EST:
Tourists misbehaving: Two arrested in Venice for cruising its waterways on motorized surfboards.
Extinct Massive Shark Was Faster, Bigger And Hungrier Than Scientists Originally Thought
Cambodia finds its ancient lost artifacts – at the Met
Need to Know starts early and updates until the opening bell, but sign up here to get it delivered to your inbox once. The email version will be sent around 7:30 a.m. EST.