Mark Hulbert: Whatever youre feeling now about stocks is normal bear-market grief and the worst is yet to come
Stock investors have a lot more grieving to do before the bear market breathes its last.
According to the five stages of bear market grief, which I addressed in mid-May, were currently at stage three. That leaves stages four and five to suffer through; unfortunately, these are the most painful.
To summarize, the five stages of bear market grief have parallels to the five stages of grief introduced by the late Swiss-American psychiatrist Elisabeth Kbler-Ross:
- Denial
- Anger
- Bargaining
- Depression
- Acceptance
Judging where the stock market is in this five-stage process is not an exact science. Investors may be further ahead or further behind. In mid-May, it was still possible to deny the bear markets existence, for example, since the S&P 500 SPX, +1.21% had not yet dropped 20% from its all-time high.
Most investors have moved beyond stages one and two. Its been six weeks since the S&P 500 satisfied the bear-market criterion and investors focus has shifted into survival mode. This brings us to the third stage, when (as I wrote in mid-May), Investors redirect their energies to figuring out if they can maintain their lifestyles despite the portfolio pullback; retirees rejigger their financial plans to see how they can avoid outliving their money.
Consider a recent tweet from Ryan Detrick, the perceptive chief market strategist at Carson Group. He pointed out that, since 1982, the stock market has completely recovered from bear markets within five months or less if the losses were less than 30%. Since the S&P 500 at its mid-June low was 24% below its all-time high, this statistic would appear to be good news suggesting that stocks may be back in new all-time high territory by year-end.
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