Earlier today I received an email from my friend Bob Bronson of Bronson Capital Markets Research. Bob offered some comments on the latest update in my periodic overview of bear market recoveries. He write:
I also would like to point out something most of your readers won't notice in this very illustrative eight-year (2,000 trading day) chart. Notice that all four were down roughly 40% during the first 1.5 years (~ 374 trading days) as high-lighted in the center of the black oval that I've annotated. Then three of them zigzagged roughly sideways for the next 6.5 years as indicated by my horizontal black arrow.
If the current index declines about 50% from its Feb 25 real total return high, as shown by the blue dashed arrow, it will be about in the center of the cluster on ~Oct 11th of this year — the end of your well-chosen 2,000 trading day range.
You might call this a normalized expectation, or at least reversion to the mean.
