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Ken Fisher Explains The Difference between a Correction and a Bear Market | Fisher Investments [NEW]

Ken Fisher Explains The Difference between a Correction and a Bear Market | Fisher Investments [NEW]


KEN FISHER What’s the difference between a correction in the stock market
and a bear market? Well, there’s a lot of squishy in there. Technically, normally,
people define a correction as a decline of 10% to 20%
in the broad market, not a subcategory of the market. A bear market is typically defined
as something that’s more than 20% down from the peak. I just want you to think about that
for a second. Because is there really a difference
that is important between down 19 and down 21?
Of course not. That’s all little stuff.
That’s little noise along the way. A big bear market down 35%, 40%, 45%, is pretty much always accompanied
by a global recession. If you think about the world
that you’re normally in, could you go from 21 to down 23
and still have that be a correction? Sure. Those corrections tend to be fairly short,
fairly sharp, over in a matter of months, not a couple of years. And then they tend to bounce back
about as fast as they came. Now, the reality is that a bear market bounces back
about as fast as it came, too. Both of them tend to have
a V-like pattern. The difference is that the duration
in a correction is much, much shorter in time
than the duration in a bear market, which is much longer in time
with a deeper bottom. So, you have a pure sentiment phenomenon
in a correction, where the economy really isn’t going bad,
but people are getting afraid of things that are really sort of fear of ghosts as opposed to fear of real things
that get bad and worse. There’s a judgment call, which you always
have to make, are things really going
to hell in a handbasket? Or are people just freaking out
and being afraid of stuff that they are extrapolating but doesn’t actually turn out
to be so bad. I think that’s what the case is
in this case. But the fact is,
there isn’t a bright line in the sand. If the market’s down 18%– which, of course, it takes a while
to get from here to there– but if the market’s down 18%,
that’s technically called a correction. If the market’s down 22%,
that’s technically called a bear market. But that’s not really important.
What’s really important is to keep your eye
on the longer-term picture of where’s the economy going
and where’s the market going in the longer term, and for that, I think,
you’re thinking about, is there a recession or isn’t there ahead?

3 comments on “Ken Fisher Explains The Difference between a Correction and a Bear Market | Fisher Investments [NEW]

  1. The question I ask myself is there growth in this economy that is not fueled by debt? It seems almost all of our growth has been debt driven and higher earnings through stock buy backs.

  2. A great series of short clips by Ken Fisher.
    I'd like to add that it was refreshing to see, unlike Warren Buffett, Ken refraining from making any wild assertions about the fate of cryptocurrency (in another video).

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