Some Common Sense

This was sent to me from Gabe Bodner, an excellent local lender:
We are clearly in the midst of a brutal bear market that began on October 9th of 2007. Since that time, Stocks have declined by a staggering 41% as measured by the S&P 500. Remember that a decline of 20% constitutes a bear market...and a 10% decline is a "correction". The last bear market which occurred between March 24th of 2000 and October 9th 2002, and saw a 49% drop. Overall, the average bear market lasts for 12.3 months, with the average decline being 32%.



The current bear market is right in line with the average historical time frames, and the extent of the decline is worse than previous bear market averages, but still slightly better than the bottom made in 2002. So the historical data might suggest that we could be nearing a bottom. Many people will say that it's different this time, and that we have never had a financial crisis like we are seeing. While that is true, it's always different, and it's always something. The last bear market was driven by fears of terrorism and fueled by a dot com/tech bubble...both of which had never been seen before either. As for the date October 9th, which was yesterday, it's interesting to note that October 9th of 2002 marked the end of the last bear market. And October 9th 2007 was the beginning of the present one. While it may just be coincidence, it will be interesting to see if our current low has some significance in stock market history.
One bright spot is that oil prices are plunging, falling from a high of $147 last July to current levels of around $75 today, at least making a trip to fill up at the gas station slightly more bearable.