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Anatomy of a bear market
Old 01-26-2016, 01:27 PM   #1
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Anatomy of a bear market

I found this analysis of historic bear markets interesting and useful ... Morgan Stanley Analyzed 43 Bear Markets and Here's What It Found - Bloomberg Business



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Old 01-26-2016, 04:46 PM   #2
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Interesting! Thanks for posting!
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Old 01-26-2016, 05:53 PM   #3
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As the old saying goes, many financial pundits pride themselves on calling 11 of the last 3 bear markets.
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Old 01-26-2016, 07:26 PM   #4
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Darn, I thought this was about a beer market.
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Old 01-26-2016, 07:29 PM   #5
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Darn, I thought this was about a beer market.
Me too!
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Old 01-26-2016, 10:24 PM   #6
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Darn, I thought this was about a beer market.

Well interestingly enough, bear markets are correlated with beer sales, go look it up!


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Old 01-27-2016, 03:52 AM   #7
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Well interestingly enough, bear markets are correlated with beer sales, go look it up!
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Prohibition in the United States was a nationwide constitutional ban on the sale, production, importation, and transportation of alcoholic beverages that remained in place from 1920 to 1933
Real root cause for the runup and subsequent hangover?
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Old 01-27-2016, 06:20 AM   #8
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As usual though, looking at averages tells you nothing about any individual case, including the current one. This correction could be done, or not over yet.
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Old 01-27-2016, 11:02 AM   #9
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I find this most interesting.
Quote:
As of today, the MSCI emerging market index is the worst performer with a 35 percent decline over the past 362 business days. That could mean EM is finally set for a turnaround, as the average duration for a decline is actually the shortest at 121 days and the drops are typically 31 percent, as seen in the previous table.
The article further points out that while the S&P P/E ratio is still high, the EM P/E is as low as it ever was in a bear market. Indeed, I observed earlier that several EM ETFs have P/E down to 11, vs. the 17 of the S&P.

Is the EM market going to set a new precedent? Dunno, but I am going to keep on nibbling in EM equities.
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Old 01-27-2016, 11:18 AM   #10
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I find this most interesting.


The article further points out that while the S&P P/E ratio is still high, the EM P/E is as low as it ever was in a bear market. Indeed, I observed earlier that several EM ETFs have P/E down to 11, vs. the 17 of the S&P.

Is the EM market going to set a new precedent? Dunno, but I am going to keep on nibbling in EM equities.
Like the Energizer rabbit, EM keeps on going ... down. For those of us with large allocations it has been painful. Call me another believer, though, I have increased my equity allocation to 20%.

My biggest EM challenge - tax efficiency and China. VWO has a very low QDI, and the funds and ETFs are all Asia-heavy.
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Old 01-27-2016, 11:20 AM   #11
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I do not mind having Asian stocks ex-China, but there's only one ETF that fits this criteria and it is small and thinly traded.
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Old 01-27-2016, 03:27 PM   #12
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Like the Energizer rabbit, EM keeps on going ... down. For those of us with large allocations it has been painful. Call me another believer, though, I have increased my equity allocation to 20%.

My biggest EM challenge - tax efficiency and China. VWO has a very low QDI, and the funds and ETFs are all Asia-heavy.
I added EM (using VWO) to my AA in 2014 and a bit more in 2015. Currently 24% unrealized loss. But despite that, I'm thinking of bumping my position to 150% of what it is today.

Even so, it'll still only be 3% or so of the total (ignoring EM in my international fund which probably adds another 3%... so 6% in total or 10% of my equities).

I hold mine in my IRA so tax efficiency is less of a issue.

20% of equities in EM is braver than I am.
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Old 01-27-2016, 07:52 PM   #13
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For those of us with large allocations it has been painful. Call me another believer, though, I have increased my equity allocation to 20%.
Does this 20% apply to your EM equity allocation, or your overall portfolio equity allocation?

Ha
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Old 01-27-2016, 08:39 PM   #14
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Well interestingly enough, bear markets are correlated with beer sales, go look it up!

I believe it.
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Old 01-27-2016, 08:40 PM   #15
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My biggest EM challenge - tax efficiency and China. VWO has a very low QDI, and the funds and ETFs are all Asia-heavy.
What, if anything, are you doing about the fact that VWO is transitioning to a very significant China weighting?

It kind of sucks to average into a deflating bubble having not enjoyed any of the original upside.
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Old 01-31-2016, 10:59 PM   #16
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Now, given that the P/E of VWO is 12 and that about 28% of VWO is China stocks, if China stocks are frothy, meaning having high P/E, then the other 72% of VWO must be extremely undervalued.

Or is it possible that China stocks are also low P/E, but they are fake?
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Old 02-01-2016, 04:22 AM   #17
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As usual though, looking at averages tells you nothing about any individual case, including the current one. This correction could be done, or not over yet.
Precisely. As I said on another thread, the market watchers and analysts have two baskets, one is full of reasons "why the markets went down today" and the other is full of reasons "why the market went up today"...

Last week, evidently, all of the bad news was used up the first 4 days, and all those reasons went away, for one day, and only the good news mattered on Friday.
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Old 02-02-2016, 01:53 PM   #18
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Idle noise here...

I just saw this go by in relation to a stock I own. It's a regular augury smorgasbord! We got Chartists, Fib numbers, oscillators, and the writer even tossed in candlesticks.

Quote:
The weekly chart shows the decline that followed the head and shoulders top that marked the 2015 highs, and the subsequent bounce off the August low that met resistance at the extended neckline. A lower high was established and the stock returned into a zone delineated by the 38% and 50% retracement levels. It has been trading in that zone since the beginning of the year. The weekly stochastic oscillator, however, has made a bullish crossover in an oversold condition suggesting a shift in price momentum. This shift scenario is being reinforced by the formation of a candle pattern on the daily timeframe.
Of course, after reading this, what I really want to know is what the sheep entrails say...

Hoo boy. I think I'll just wait for another dividend check.


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Old 02-02-2016, 05:38 PM   #19
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Of course, after reading this, what I really want to know is what the sheep entrails say...
I'm partial to Bangladeshian butter production myself...
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