Monday, October 20, 2008

Our Current Bear Market and Other Bear Markets

Is our current bear market like other markets? There are many commentaries on this subject. You will hear people refer to other bear markets or similar problems occurring in the past somewhere. You probably also hear this bear market being referred to as a “Black Swan”. No, this bear market is not the same as some other bear market, but that does not mean there are no commonalities.

Mark Twain once said, “History doesn't repeat itself, but it does rhyme”. He is exactly right. The same thing came be said of bear markets, you will never get two exactly the same, but that does not mean they cannot "rhyme". Do not try to deal with the current bear market as if it was like another one. This will not work. It is like Generals in a war, who are only prepared to fight the last war, not the current one.

So, educate yourself about bear markets to figure our how to handle this one, but remember, it is not exactly like any pass bear market. I have been through a number of these things since I started investing in the 70’s. I have also read about bear markets. Also, what is a bear market depends on point of view. You could have the point of view that the US and Canadian market are one long bull market, as they continuously go up. You can see it them as a series of bear and bull markets. When you read about bear and bull markets you will see that depending on who is talking, different timings are given.

What really kills stocks markets is if a country is invaded or if a country goes bankrupt. If you think that a Western country cannot go bankrupt, you did not hear about the problems New Zealand had in the 1970’s. However, I do not think that any Western country, especially Canada, is going to have such problems anytime soon.

When people are referring to this bear market as a “Black Swan”, they are referring to a theory or a concept that a phenomenon could occur even if no one has ever observed it before. See Wikipedia entry at for more information on this concept or theory.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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