'..Phase 1 – Denial. The first phase in a bull market begins as its last bear market is ending. After a long-lasting bear market hardly anyone is even interested in the investment class, and almost no one is thinking of watching for a bottom. The asset class has been dismissed as a poor investment long ago and there is very little interest left. The stock market of the early 1980’s is a good example of this. The sentiment at the time was very different, and the market had gone nowhere for more than 16 years. The market zigged and zagged, and no one was even considering the “buy and hold” strategy as a viable option as the bear market finally ended. People had been burnt over and over again, and nearly all of the investment public had thrown in the towel. So, once the final bottom had been formed, market participants remained highly skeptical, and tended to stay away from the market even as prices continued to rise. Only the so called “smart money” participated in this in this early phase of the bull market. Phase 2 – Climbing a Wall of Worry. The second phase of a bull market is when the general investing publish becomes aware of this new market that is continuing to move higher. This is usually the longest lasting phase of a bull market and it’s characterized by higher volatility. During this phase, the media starts to cover this new sector and you start seeing experts being interviewed on television. Still, uncertainty remains the theme of the day and most of the investment public finds it hard to take action. They see the prices rise, but in the back of their mind they still remember the last painful bear market and many consider the asset class too risky. Despite increasing media coverage, people are skeptical and the naysayers are dominating the airwaves. Only after many years of out outperformance in the sector does the sentiment start to change and the market participants start to feel good about the investment they have made. After a long period of strong performance people starts to forget about the last bear market, and with a new optimistic attitude the moods becomes more positive and we enter the next phase of the bull market. Phase 3 – Euphoria. Years after year of good returns have silenced the bears, and most of those who remained bearish in phase 2 have now changed their mind. The bulls dominate the media and make up compelling arguments why prices will continue to rise indefinitely. It has become conventional wisdom that this investment class always goes up and you begin to hear familiar phrases such as “stocks for the long run”, and “real estate will always go up”. The public starts to invest en masse in this asset class, bidding up prices faster and faster, accelerating the returns and making it exhilarating for everyone. The last few investors that still sit on the side line usually gets pulled in during all this excitement. Then, at the top of this excitement a problem starts to occur. There are not enough new investors left to continue to bid up the price so the whole thing starts to slow down. But after years of superior returns most people no longer remember the pain of the last bear market and they remain hopeful, even after the market starts to head down. This is often referred to as the "bear slides down the slope of hope". After a decade long bull market most investors are still convinced that this investment is infallible and it usually takes several years for reality to finally settle in...' more: http://www.contrarian-investor.com/bull-and-bear-markets.html -----------
Pessimismus ist irrelevant |
Thread abonnieren
