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Bailouts Will Not End the Stocks Bear Market

Stock-Markets / Stocks Bear Market Sep 23, 2008 - 12:22 PM GMT

By: Money_and_Markets

Stock-Markets

Best Financial Markets Analysis ArticleSharon A. Daniels writes: The Dow first brushed up against the 1,000 level when I was just a kid, and by the time it closed above 1,000 for good, I was old enough to have kids of my own.

The entire period of the late '60s, the full decade of the 1970s, and even the first few years of the '80s, was one long and painful secular bear market in stocks. This period was basically a "lost decade-and-a-half" for investors.


Looking back at the long history of the financial markets, you soon realize that secular bear markets have happened many times in the past.

This secular bear-market in U.S. stocks beagn in 1966, and didn't end until 1982 ... 16 years later!

Think of the Great Depression, for instance. The fabulous bull market rally of the "Roaring 20s" ended with the "Great Crash" in 1929. After the crash, the Dow would not regain its 1929 level again for another 25 years!

Secular bear markets aren't just a phenomenon unique to the U.S. stock market either. Just take a look at Japan over the last two decades ...

New Year's Eve 2008 Will Ring in 19 Years of Japan's Ongoing Secular Bear Market in Stocks

Two days before New Year's Eve in 1989, the Nikkei 225 Index of Japanese stocks peaked at 38,915.

Today, nearly 20-years later, and after several painful recessions in Japan, the Nikkei trades at just 13,334 — still nearly 70% below its peak value. 1

This secular bear-market in Japan beagn in 1989, and continues TODAY, nearly 20 years later!

What makes secular bear markets so catastrophic for investors is that it's often difficult to recognize that you're in one until it's too late — until a good chunk of your wealth is destroyed.

Secular bear markets have a nasty habit of following strong bull market gains. So they strike when you least suspect it. During a long and profitable bull market, investors get lulled into complacency by a long period of strong stock market gains.

The Crash of '29 followed a long period of prosperity during the Roaring '20s. The bear market of the 1970s came after a long post-war economic boom in the 1950s and early '60s. Japan enjoyed a roaring bull market in the 1970s and '80s that saw the Nikkei rise nearly ten-fold in value.

Bust Follows Boom in Financial Markets,
Like Night Follows Day

This same boom followed by bust cycle repeats over and over again in financial market history. And right now it seems history is repeating itself.

The S&P 500 Index peaked in March 2000 at 1,527. Seven years later, in October 2007, it made only a marginal new high — just 38 points — at 1,565! Since then it has been all downhill — stocks have lost over 20% of their value since October 2007. 2

That means if you had bought a basket of securities that represent the S&P 500 Index just 10 years ago, you'd have earned ONLY 1.2% per year on your money over the last decade in terms of simple price appreciation.

If you had reinvested your dividends — which is easier said than done, since many investors spend their dividend income — then your portfolio would have performed only slightly better - a 2.9% annual return. 3

Either way, 1.2-2.9% return ... that's a far cry from the long-run average annual return of 10.7% that stocks have produced from 1926 to 2000. 4 And not even close to what long-term stock investors have come to expect.

But that's a secular bear market for you! And there are several key points you MUST consider to help DEFEND and GROW your wealth in this kind of market environment.

  • First, you've got to recognize that we're in a long-trend bear market. Don't expect a lucrative new bull market to be just around the corner. It could be some years before the Dow, S&P 500 and Nasdaq hit new, all-time highs again.
  • Second, seek out alternative investments in other asset classes.
  • And above all, look for proactive ways to "hedge" your portfolio against continued financial market turbulence.

What makes a long-term, secular bear market so catastrophic for investors is that it's often difficult to recognize that you're in one until it's too late; until a good chunk of your wealth has been destroyed.

Secular bear markets have a nasty habit of sneaking-up on investors...they often follow strong bull market gains, striking when you least suspect it. That's because during the preceding bull market, investors get lulled into complacency by a long period of strong stock market gains. Then without warning, the business cycle shifts, and sadly most investors just don't see it coming.

At Weiss Capital Management, we're not Bulls, and we're not Bears. We like to think we are "flexible realists" with the experience to not only recognize a bear-market environment when we're in one...but also do something about it !

Expertise to Help Protect and Grow
Your Wealth in Bear Markets

Weiss Capital Management has helped clients to weather bear markets before and we're equipped to help you now.

If you own stocks, bonds, mutual funds or other investments that are vulnerable to the next sell-off, we offer a unique "hedge" strategy that we believe has proven particularly effective in declining markets.

Weiss Capital Management is one of the few investment advisers I know of that offers clients an investment strategy tailor-made for bear market conditions: The Weiss Bear Strategy !

This professionally managed investment program is designed to go UP in value, when stocks and bonds are going DOWN. And over its lifetime, the Weiss Bear Strategy has outperformed the market — beating the S&P 500 Index by a wide margin since inception.

But as you can see in the graph below, it's in a bear market when this strategy really shines ...

Growth of $100,000 in The Weiss Bear Strategy vs. S&P 500 Index

We first introduced this strategy in 2000, during the start of a severe bear market decline. We designed this professionally managed program to protect your wealth — and potentially earn profits — as markets decline.

While past performance can't ensure future returns, the Weiss Bear Strategy has built an impressive track record of performance in both up and down markets — but especially in bear market conditions like we have today.

  • From December 31, 2000 to March 31, 2003 — during a severe bear-market environment — the Weiss Bear Strategy gained 43.8%. Meanwhile, the S&P 500 Index lost 33.5%.*
  • Recently — from April 1 through the end of June, 2008, the Weiss Bear Strategy rose 9.29% while the S&P 500 Index fell 2.73% during that time period.*
  • In fact, since inception, the Weiss Bear Strategy has delivered nearly three times the return of the S&P 500 over the same period (December 31, 2000-June 30, 2008): up 30.6% compared to the S&P's +10.6%.*

So, rather than sitting in cash or riding-it-out as your current investments decline in value, consider putting the Weiss Bear Strategy to work for you.

Of course you can lose money in this program, just like any other investment, but if you're looking for a new way to earn potential gains amid widespread stock market losses, the Weiss Bear Strategy has a proven track record of success.

We Invite You to Learn More about this Unique Investment Program

At Weiss Capital Management, our goal as a firm is to do everything possible to help grow and defend your investments from the clutches of the bear. We urge you to consider the Weiss Bear Strategy in today's market environment.

To help protect your wealth in this bear market, I have gathered two of my trusted colleagues and we've scheduled a special video webcast presentation, including our up-to-date outlook on financial markets and the economy. We'll also provide more details about the Weiss Bear Strategy.

We'll cut through the fog and offer you proactive solutions ... actions you can take NOW to help protect your wealth. Also, we will give you more details on why the Weiss Bear Strategy can turn DOWN markets into potential profit centers.

We invite you to attend this special FREE video briefing...

What : Bear Market Defense Forum,
Presented by Weiss Capital Management

When : Wednesday September 24, 2008
at 12:00 noon Eastern Time

How to Attend : REGISTER HERE!

In today's turbulent stock market environment, I believe it's absolutely essential for you to see this special presentation. We'll give you the facts you need to help protect your portfolio. As part of the Bear Market Defense Forum you'll discover…

  • Why the ongoing housing bust is likely to get WORSE before it gets any better — keeping consumers under pressure ...
  • A "real-time" indicator we use that tells us this credit crunch is FAR from over, and what it means for the economy...
  • How a simple strategy may help protect and potentially grow your wealth during a bear market environment ...
  • And much more!

This special video webcast is absolutely FREE; no strings attached. This information may prove critical in helping your investments escape the clutches of the bear market ... showing how you can earn potential profits even while markets decline more!

However, my IT department tells me there's only so much "bandwidth" available for our viewers. So space is strictly limited to those who register in advance. I urge you to register now , so you don't miss a minute of the Weiss Capital Management Bear Market Defense Forum .

My heartfelt advice: If you value the security of your investments — and especially if you're looking for a way to keep your wealth growing in this perplexing environment — click here now to register for the Bear Market Defense Forum . Then, immediately check your inbox for your login instructions to attend the webcast on Wednesday at NOON.

Best wishes,

Sharon A. Daniels, President
Weiss Capital Management, Inc.
www.WeissCM.com/bear

P.S. The Bear Market Defense Forum is just TWO DAYS away, and space is strictly limited, so don't delay, register today !

*Weiss Bear Strategy Complete Performance:

Weiss bear Strategy - Returns Thru 6/30/2008

Net returns are based on a composite of actual client accounts and include actual management fees, commissions and other similar fees charged on transactions, and reinvestment of dividends, income and capital gains.

Past performance is not indicative of future returns and, as with any managed program, it is possible to lose money by investing in this strategy. For more information, please refer to the WCM Form ADV Part II and program materials before investing.

Sources:

1 Bloomberg Financial Data, 9/17/08

2 Bloomberg Financial Data, 9/17/08

3 Ibid

4 Ibbotson Assoc. Yale ICF Working Paper No. 00-44, March 2002

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

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