Despite what has appeared to be a precipitous fall, the major indices are masking improvement. Fewer stocks are making new lows as market averages do. Trading volume is also drying up on those dips. Then, there is clearly buying interest in certain sectors on those rare up-days. Some sectors may have already bottomed. However, the day-to-day action is aggravating. Good days almost immediately followed by sell-offs. Volatility is off the charts.

The Bull and his partners have been through many tough markets. This is one of the worst. We will all get through it. The backdrop is not nearly as scary as the early days of the financial crisis of 2008 – 2009. Then, it seemed our entire financial system was in danger of collapsing. People were losing their homes, cars, boats, etc. More than a few declared bankruptcy. Today’s environment is nothing like that!

Remember, bear markets are not that long-lived. Six to eighteen months is typical. This one is about seven months old. History is a good guide. If an investor bought at the top of the market in 2007 (October 9th), he/she would still have made 9.10% per year compounded until April 30th of this year. That same investor trying to time the market missed only the best 5 trading days, their return would have dropped to 5.71%. That is 5 out of 3,665 days. Ten days the drop would be to 3.41%, 15 the return would only be 1.51%, and 20 the results would be a loss. Stay steady my friends.

The Lonely Bull

Sincerely,

Scott C. Wohlers
Riverplace Capital

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