Know Your Bear Breeds

Event-driven bear markets, like what we are seeing right now, are often short-lived. [Shield] AN OXFORD CLUB PUBLICATION [Profit Trends]( [View in browser]( SPONSORED [$10 Tech Stock Multiplies Profit 12-Fold in One Year!]( [Shape-Shifting Smartphone]( Groundbreaking new tech is being hailed as a "technological tour de force." And one company is seeing profits pour in. [See why Samsung, Tesla and Apple are all reportedly now working with this $10 stock.]( Editor's Note: Engineering Strategist David Fessler has NEVER been this convinced of a stock's gigantic growth potential... Not when he recommended Tesla in 2013... Not when he recommended Nvidia in 2016... And not even when he took out a second mortgage on his home to buy a stock that sealed his early retirement at 47. So if you buy just one stock in 2022... Make it this one. [Click here for more information.]( - Kaitlyn Hopkins, Assistant Managing Editor [Know Your Bear Market Breeds]( [Matthew Carr | Chief Trends Strategist | The Oxford Club]( [Matthew Carr]( Investing is a marathon, not a sprint. In times like these, though, it can feel more like we're riding around in wonky bumper cars at a county fair. But we have to remember [not to panic](. There are dozens of powerful quotes from the world's wealthiest individuals and savviest investors that we can turn to for guidance on how to navigate the choppiest of seas. "Buy when there's blood in the streets." "Be fearful when others are greedy, and greedy when others are fearful." "The end is not nigh: People and markets adapt to even the worst circumstances." Even in the midst of a sell-off, we have to remember that we're [investing for the future](. Not for today. And not for tomorrow. But for the months and years down the road. A Straw Too Many It's hard to believe that two years ago we were in the midst of one of the most rapid declines in market history. The S&P 500 tumbled 30% in a mere 22 days in March 2020. And at the time, investors were trying to understand how large of a threat COVID-19 posed. But I told investors not to panic because the [bear market would be short-lived](. As it so happens, it was the shortest bear market in history. Today, the pandemic is the least of our worries. Oh, what a difference two years make! If only the coronavirus or one of its many variants were the sole obstacle for investors today. Instead, the markets have been plunging this year because of an ever-expanding list of hazards. We have [the fastest pace of inflation]( in four decades. [The Federal Reserve is raising rates]( to try to stem the tide of inflation - and is devastating tech stocks in turn. There's the lingering pandemic-induced global supply chain crunch that is hampering growth and adding to inflationary pressures. And we've heard from companies that the supply chain issues are being exacerbated by the "[Great Resignation]( Then, of course, the cherry on top is Russia's [unprovoked invasion of Ukraine](. This has resulted in global condemnation and sanctions against Russia, which have triggered a spike in commodity prices - adding even more to inflationary pressures. It's also spurred flights into safe havens such as gold and U.S. Treasurys. It's a straw too many for the camel's back. But here's the deal... It's not the end of the world... hopefully. SPONSORED [The One Proven Path to a "Never-Ending Income Stream"]( [One Proven Path]( If you're worried about running out of money in retirement... you need to see [what two Ph.D. professors have uncovered](. On-Time Correction Some of the most dangerous, expensive words in history are: "This time is different." Now, 2022 isn't going to be like 2020. But there are some similarities between the two. This year has been a mess for the markets... [as I forecast it would be to kick off 2022](. And it's images like these that highlight the widespread anxiety. [Chart - Broader Indexes - Year to Date]( The Nasdaq has fallen 20% year to date. It's now in bear market territory. And its recent declines add to the struggles tech stocks have experienced this year. The S&P 500 is in correction territory, and the Dow Jones Industrial Average is hovering right near that level. The last time the S&P was in a correction was 2020. Now, let's talk about what to expect from corrections. Historically, the markets average [a 10% correction every 2.8 years](. They're more common than most investors think. And during corrections, stocks suffer an average decline of 13.7% over a four-month stretch. The S&P's last high was a little more than two months ago, on January 3, and it currently sits 13% below that level. Using history as our guide, it takes roughly four months for the markets to regain all the ground they lost after a correction. That means, assuming today is the bottom of the correction, we shouldn't expect the S&P to fully recover until July. But what if the correction continues lower... Know Your Bear Breeds Not all bear markets are the same breed. There are structural bear markets, cyclical bear markets and event-driven bear markets. And each has a different average decline, duration and recovery time. A structural bear market is triggered by [financial bubbles]( or structural imbalances. Think the dot-com crash of 2000 and the financial crisis of 2008. Cyclical bear markets are a function of rising rates, impending recessions and profit declines. And event-driven bear markets are triggered by an exogenous shock, like the 1973 oil crisis, the COVID-19 pandemic or a war - [like Russia invading Ukraine](. These typically don't lead to domestic recessions. Keep in mind, prior to Russia's siege on Ukraine, the markets were rallying on fourth quarter earnings. Now, structural bears are the worst. These last for an average of 42 months and see a market decline of 57%. It then takes 111 months for the markets to recover. Cyclical bear markets are part of the business cycle. Stocks fall an average of 31% over 27 months and take 50 months to recover. Event-driven bears are furious and short-lived. But they can often be the scariest. The average decline is 29% over nine months. But it takes a mere 15 months for the markets to completely recover. It is the easiest bear to tame, with a considerably shorter uphill climb than structural or cyclical downturns. So even though [it may feel like the end of the world]( at times, it's not. Panic, anxiety and uncertainty are widespread. But I've stressed over and over that the biggest gains are made during corrections and bear markets. This is when babies are thrown out with the bathwater, so to speak, and we can buy shares of great companies for ultra-cheap. All we need to do is watch for the moment of maximum opportunity - when pessimism surges to a peak - and start adding to our positions. When our future selves look back, they'll thank us for being greedy when fear gripped everyone else. Here's to high returns, Matthew P.S. My good friend David Fessler has found the only 5G stock you need to own. Its growth potential is so large that investors who get in soon could see their profits soar. This is a moment where taking decisive action could change your life. Sitting on the fence will only lower your profit potential. [Get the details here.]( [Leave a Comment]( RECOMMENDED LINKS [This Could Be the Perfect Electric Vehicle... 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