March 9, 2018 2:00pm by Barry Ritholtz
Pick Another Day to Celebrate the Bull Market’s Birthday
Yes, the lows were on this day in March 2009. But the next four years were just the recovery from a huge collapse.
Bloomberg, March 9, 2018
On this day in 2009, the major stock-market indexes closed at lows not seen in more than a decade.
Although we now know this was the bear-market bottom, we only know that with the benefit of hindsight. At the time, few people could say with conviction that this low point was the low.
On this anniversary of that bottom, I want to look at why bear market recoveries and bull markets are so very different and distinct. This is especially true if you consider factors such as price, trend, value and investor psychology. Confusing the two is a potentially expensive error.
The gains since the 2009 low have been impressive. The Standard & Poor’s 500 Index is up 311 percent, or 16.7 percent on an annualized basis. If we include dividends, the gain is 385 percent, or 19.2 percent annualized. The value of U.S. equities has increased by $25.6 trillion during this nine-year period.
Yet looking at these spectacular gains from the lows until now creates a very misleading picture. It ignores the collective psychology of the time — lots of investors back in March 2009 were sellers, not buyers. Indeed, that panicked selling — I surrender! — is how market bottoms get made.
I won’t show you that misleading chart from March 2009 until present, as it leads to two specific investor errors. Instead, I want to give you some context, the bigger picture, to help you grasp what actually was going on…
http://ritholtz.com/2018/03/bull-markets-cant-start-bear-markets-end/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
| 
