Experts Say We Are In a Secular Bear Market: How Bad Is It?

Many of the experts say that we are in a secular bear market, but what does this mean, and how bad is it? To understand this first you must understand what a bull market and a bear market are, as well as what the word secular means in relation to the market. The market can be either a secular bear market or a secular bull market, or either type of market that is not secular. Secular refers to the fact that the market cycle lasts for a longer period of time, normally between five to twenty years, and secular markets normally last near the upper time limit and not the lower. A bear market is when market conditions go down over an extended period of time, falling significantly and staying below the previous high by at least twenty percent. A bull market is just the opposite of a bear market. The market cycle consists of bear markets and bull markets that alternate, but normally these cycles may last days or months. A secular market means that the current market trend will last up to twenty years.

A secular bear market can be an extremely bad thing, and the experts predict that this bear market started in the year two thousand. If this is true that means the secular bear market has been in effect for just eight years, so there may be twelve more years or more of the current market conditions. Bear markets are known for financial losses and very small gains or returns, and a secular bear market means fifteen or twenty years of these conditions. A secular bear market does not mean there are no periods of market improvement, as the last six months has shown. The market may make small gains before dropping back down, but the gains will be fewer and farther apart. A secular bear market tends to move stocks down or sideways, instead of up. With a secular bull market, even if market conditions include some concerns the market will tend to rise.

A secular bear market means changing up your trading strategy, and reevaluating your portfolio. It is possible to make money in a bear market, even a secular bear market, if you follow a few steps. Invest for the long term, because in these markets it is close to impossible to predict market movements. Long term investing means looking at the long term goal, instead of the close future. A bear market can actually offer some terrific investment opportunities, because prices are low and that is when most investors want in. With a secular bear market, research becomes even more important, if that is possible. Understanding the long term viability of a company and stock is critical, because a secular bear market combined with the current economic downturn and financial crisis means that investors should be looking at least ten to fifteen years in the future. This will help you profit over the long term, and make a return in a secular bear market.

A secular bear market can mean bad news, just like a secular bull market can mean good news, but a good investor can still get returns from a secular bear market. The returns will probably be much smaller than they would be in a secular bull market, but you do not have to experience large financial losses and can even see a small amount of portfolio growth. Quality investments and portfolio diversity across all asset classes can help you minimize your financial risks whether the market is bullish or bearish.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.