Generational Buying Opportunity

Stocks have gained 55% since the March lows, meaning it would take a 35% decline from here to revisit those levels.

Will investors ever get another chance to swing the bat at Dow 18k?

Let’s look at some historical data for some clues.

The chart below shows all the bear markets going back to the Great Depression. I placed red circles where a 20% or more decline marked a bottom, and indicated with the thumbs down when it didn’t. For example, the bottom in 2002 gets a thumbs down because prices were lower in 2009.

Bear markets can be tricky to define because technically stocks were in a bear mark from 1929-1955, but there were 6 distinct declines of 20% after the bottom in 1932. Also, are we really going to split hairs with 19% declines, like 2011 and 2018? The way I’m counting, I’ve got 19 bear markets, where 13 experienced a permanent bottom, while the other 6 did not.

Generational buying opportunities never feel like them in real time because they only happen when everybody wants to sell. And everybody only wants to sell when something terrifying is happening, like a recession, or a World War, or in this case a pandemic.

Josh and I get into this and more on this week’s episode of What Are Your Thoughts?

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