The current secular bear market indicates that the investors tend to sell off their securities so that they do not lose out. Experts state that despite the secular bear market, a short spell of bullish behavior shouldn’t be ruled out. The article below furnishes details of the characteristics of the secular bear market.
The current secular bear market conditions and the driving forces behind them differ from what they were way back in the 1980s and 1990s. A secular bear market is known as the market conditions that are characterized by a bearish attitude on the part of investors over a long period of time. In fact, secular is defined as long time period.
When a market is said to be bearish, it means there is a tendency of the investors to sell their bonds, and shares.This is in contrast to the secular bull market wherein the investors tend to buy securities.
It was observed in the year 2004 that if we go back two centuries, there were as many as 7 secular bear markets, which stayed for 14 years. Each year had a real return of 0.3% on average. Each of the seven bear markets recorded returns of 13.2%.
Accounting norms in a secular bear market:
We have seen time and again that when a secular bear market is underway, the accounting norms become exceedingly stringent.
As we know, a bear market determined by a 20% drop in the indexes over at least 60 days. As of January 2008, as per the S&P 500 index, that 20% decline was almost met.
Some economists are of the opinion that most of the world economies have never come out of secular bear markets, especially the “short term cyclical bears”.
It is usually seen that even within the secular bear markets cyclical bull markets are possible. While the bulls may drive the markets upward by 100%, the activities of a bear may pull back the value of stock markets by 50%. The current secular bear market indicates the favoring of a “multi year cyclical bear”(as per SPX). Should this prevail, precious metals are likely to make a mark in this bearish market.