The latest symptom of this is the completely bogus statement that a bear market is one that has already fallen 20%; this is like saying an accident happens when the participants are admitted to A&E.
The funny thing about the markets and crashes in particular, is that most people get the timing of everything wrong.
A bear market is when the market tendency is down; you can have a small bear or a big bear.
After all, an investor wants to avoid a bear whether it’s 10% or 50%.
A crash on the other hand is a 25% fall and you can have crashes in a bull market as anyone who lived through 1987 will freely admit. While this massive crash took place, about a third of the way into a huge bull, it would be meaningless to call it a bear market as even though the drop was huge the tendency of the market was up and the effects of the whole crash were soon wiped out.
This brings me to my main point. The biggest timing error made by most investors and traders is to believe things are falling apart after they have fallen apart. We are in just a phase now.
Everyone is hugely bearish, yet right now the DOW in the US is getting back to its recent pre summer slump highs. We are a long way from recent lows, yet the tone of the media would suggest we were all going to hell in a hand basket.
The same goes for the euro crisis. To me it looks over.
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