Despite the risks, it is important to keep perspective
Despite headlines, unprecedented policy support helped 2021 become one of the least volatile years for stocks in half a century; 2022 has gotten off to a rockier start
Bear markets are inevitable, but they don’t last forever
U.S. bull market cycles tend to last longer than and outperform bear market drawdowns
U.S. equity sentiment has dropped to 36%, the lowest reading since March 2020
The percentage of stocks above their 200-Day M.A. has been falling since December of 2020
U.S. equity valuations remain stretched, but strong earnings growth has closed the gap dramatically since the start of the 2021
Markets have pulled back from ATH’s, but are still some way away from a bear market; interestingly, bear market level is inline with LT average market valuation
Credit tends to lead equities on the way out of bear markets
Labor is a lagging indicator: by the time the labor market bottomed in 2010, the stock market was already up almost 70%
Current drawdown vs. historic bear markets
Historically the stock market has performed well post the start of a war/ invasion
Bear Market Anatomy: 1929 Crash & Great Depression
Bear Market Anatomy: 1987 Crash
Bear Market Anatomy: Tech Bubble Bursting
Bear Market Anatomy: Global Financial Crisis
Bear Market Anatomy: Coronavirus Crisis
Could the current market drawdown be the start of a new bear market, or is this simply a correction?
Recent cycle returns have largely been driven by valuation changes, which has contributed to volatility
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