Lead-Lag Live: What If the Bear Market Is Over
Bear markets can be tricky. Some last for up to 18 months. Some last for just a few months. Some meet the technical definition of just a 20 percent drop from a prior high. Others drop further than that.
For investors, psychology matters as well. By the time traders are convinced that a bear market has set in, it may be over. That could lead to losses as traders remain bearish while stocks start heading higher.
Markets hit a low in June. And high-tech parts of the market hit the hardest have somewhat flattened out as well. There’s a potential sign that the recent market pain may be over.
That’s also apparent with private equity. Deals are still being made. However, valuations for those deals have come down substantially compared to the past two years.
There may be some more downside, particularly in private markets. For publicly-traded stocks, that also suggests some more potential pain in the coming months.
That’s particularly true for companies that may still face some stress amid rising interest rates and a slowing economy. Many companies that went recently-public have no history or record of faring well in a tough market environment.
Fortunately, investors who look for recession-resistant ideas can still fare well. And by taking a longer-term approach now, investors can find stocks to outperform the market.
Consumers still remain relatively strong spenders, and that will translate into higher real spending as inflation declines.