Takeaways from Bull and Bear Markets of the Century

It's easy to forget that the stock market has been around forever. In fact, the first markets to trade debts and equities (stocks) started hundreds of years ago. We can study market history to help shape our expectations for where the market may be headed. However, just like everything in investing, the phrase: "past performance is no guarantee of future performance" should be kept in mind. In a bull market, prices go up, and investors' holdings are worth more. In a bear market, prices fall, and investors' holdings are worth less. It's easier said than done, but probably the most basic investment advice is to buy low and sell high. Buying in a bear market is a tremendous low point, and selling sometime during a bull market could be a great high point.

Check out the S&P 500 since the 1940's below:

Bull Markets

• Positive returns, average gain of ~150% total return over 4.5 years, generally slow and steady
• Last about 4x longer than bear markets
  There is much more blue, showing bull markets, in the graph above than the yellow of the market dropping. This makes sense in that the market grows value over time, along with inflation, population growth, and other natural growth.

Bear Markets

• Negative returns, an average loss of ~30% over 11 months, generally quick, sharp drops in stock values
• Can be described as times of "panic," where investors get overwhelmed and sell positions because of a lack of emotional control
• An excellent buying opportunity for quality stocks at a discount

Trades

• Milena bought ~$1,400 of BRK.B (Warren Buffett's company, Berkshire Hathaway) and ~$600 of APPH (App Harvest)
• Most of us are still sitting on the additional $1000 in cash. Please remember to update the google sheet detail tab when you buy/sell something. I look at the revision history each month so I can include your trade in this newsletter. The summary tab is at the bottom of this email as a picture and the live link to it is here.