As Bob Prechter says, bear markets move fast and are intensely emotional.
Anyone who has been watching the market for the past few years knows that Wall Street wanted the stock market to get back to where it was.
You know, to the optimism and price levels in the time before the 2008-2009 financial crisis.
And Wall Street did get its way in the Dow Industrials more than a year ago. The index reached new all-time highs in 2013.
As for the return to pre-crisis optimism, that took a bit longer. But return it did, and very recently, in two measureable ways:
- Stock ownership just hit “a rare extreme” — 34.4% of total financial assets among US households. That’s a higher percentage ownership than in 2007.
- The percentage of bears among advisory services fell to 13.3%, the lowest in 27 years. “This means 87.6% of advisors are bullish on the long term trend.”
Of course, these are contrary indicators. Many other similar measures have reached similar extremes. So when it comes to a “Return to 2007,” the real question is:
How far will the re-enactment go?
Markets are most likely to turn when the fewest number of participants expect it. The reason truly big market meltdowns become meltdowns is because so few people are ready beforehand.
We’ve seen a lot of down days in the stock market since the September 19 high. And, after every one of those losses, I read and hear the same idea from the media: This is “a buying opportunity.”
In truth, that notion is also part of the re-enactment.
I’m obliged to say that it’s hardly been two weeks since Bob Prechter published his Special Interim Report. It posted in the afternoon on September 19, the same day as the high.
In 20-point type, Bob said
“This Is It.”
It’s times like these that investors need to prepare for the coming bear market. What we’re seeing is only the beginning. We would rather see you prepare early instead of late.
Preparing early means sidestepping perhaps the biggest bear market in living memory. It means safeguarding your spending power as others struggle to make ends meet.
As Bob Prechter says, bear markets move fast and are intensely emotional; investors and traders who are prepared have greater opportunities on the downside than on the upside.