You may have noticed that the frequency with which we post new ideas on this site has slowed somewhat over the last month or so. Our earlier ideas are generally up substantially, but that’s nothing to crow about given that the market as a whole, after falling 56.8% from its peak, is up 24.4% from its trough. Anyone who thinks that the bounce means that the current bear market is over would do well to study the behavior of bear markets past (quite aside from simply looking at the plethora of data about the economy in general, the cyclical nature of long-run corporate earnings and price-earnings multiples over the same cycle). They might find it a sobering experience.
CalculatedRisk has an ongoing series of graphs from Doug Short showing how the current bear market compares to three other bear markets: the Dow Crash of 1929 (1929-1932), the Oil Crisis (1973-1974) and the Tech Wreck (2000-2002) (click for a larger version from dshort.com via CalculatedRisk):
The current bear market has been deeper and faster than either the Oil Crisis or the Tech Crash, but it really pales into insignificance beside the Dow Crash of 1929 (maybe not insignificance, but you get the picture. If this was the Dow Crash of 1929 we’d have another third to go). We’re not sure what one can deduce from the graphs, other than several big (>20-30%) rallies in the middle of a bad bear market is nothing unusual and there’s no obvious price behavior that heralds the end of a bear market. We think it’s worth keeping in mind.
Greenbackd 
It is interesting, especially to think that twenty years from now people will still be studying this period to try to “understand” what went wrong.
Just going by my idiosyncratic knowledge of stock market history, this drop would seem to be just about right, relative to other bear markets. The economy is worse fundamentally than 1973-74, but not as bad as 1929-32.
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Of course, value investors should HOPE for more turmoil in the markets leading to even better prices. We will all be richer eventually if the March low wasn’t the bear market low.
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But I don’t see you selling yet, right? If you’ve sold out of everything, including your best idea, be sure to let us know. I’ll do the same.
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widemoat,
The general level of the market makes no difference to whether we enter or exit any positions. We’ll still only buy when a given stock is positioned to return more than cash and sell when a given stock is at or above value. We’re just raising it as a point of interest.
G
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