... Bull and bear markets ...

• If you buy cheaply in a bull market, and sell higher, you make a profit
• If you buy high, and a bear market comes round, you make a loss
• Bear markets involve sudden steep declines and long rallies
• Bull markets recover from any setbacks
• If you bought Wall Street at the 1929 peak and held on, it took 24 years to break even

Examples of bull markets

1. Gilts since 1982 (still a long way to go)

2. UK equities 1975 to 1999

Examples of bear markets

1. Gilts 1957 to 1982

2. Wall Street 1929 to 1932 (see graph)

3. Japanese equities 1990 onwards

4. UK equities now

In a bear market, there is only one rule: KEEP OUT.  Otherwise it is all too easy to turn a nasty loss into a wipe-out, there is no room for mistakes.

In a bull market, the rules are hold on, and buy the dips.  But these rules fail miserably in a bear market!

A bear market is not just a 10% decline followed by a new bull market.  It is the whole cycle, leading to 60%, 70%, or even greater losses, with each new "bull market" nothing more than a counter-trend rally.

The only bull markets around today are in Gilts and US Treasury Bonds.

See also the notice on the homepage.