Pop Quiz: How Many Bear Markets Can Happen at Once?

Lots of markets around the world are already bearish. SPECIAL OPPORTUNITIES [The Oxford Club Special Opportunities]( Pop Quiz: How Many Bear Markets Can Happen at Once? Matt Benjamin, Senior Markets Expert, The Oxford Club [Matt Benajmin] Are we in a bear market yet? Well, yes and no. The S&P 500 Index is only in a correction, which is generally defined as a drawdown of 10% or more from its most recent high. But many other stock indexes are now in bear market territory (typically defined as a drop of 20% or more from its recent high). That goes for both U.S. stocks and international stocks. The Nasdaq Composite, which is loaded with technology stocks, is just about 20% below its November high as of this writing. Side note: The Dow Jones Industrial Average is down just 10% from its high in early January as of this writing. But [the Dow is an outdated index]( - it tracks only 30 large companies, and it is price-weighted, which means the highest-priced stocks have greater weight in the index. So a very small company in terms of market cap could be more important than a huge company with a cheaper stock. It's not a great gauge of the broader market. The Decline Felt Round the World Globally, lots of stock markets and indexes are in bear territory right now. China's stock market is dropping like a rock. The CSI 300 Index, which tracks China's biggest companies, is down almost by a third since February 2021. That's a result of resurgent waves of COVID-19 rocking that country, as well as a regulatory crackdown by the Chinese government last year, which hammered Chinese tech stocks. Other emerging market (EM) stocks (China, despite its massive economy, is an EM country) are also faring poorly. The [MSCI Emerging Markets Index]( which tracks large cap and midcap stocks across 25 EM countries, is down about 27% from its recent peak. That EM index has been dragged down by Chinese stocks, which make up about 32% of the index by weight. In addition, many other EM nations have been hit particularly hard by the pandemic. And EM stocks often suffer when the Federal Reserve begins to hike interest rates (as it's doing now), as many investors pull money out of EM stocks to take advantage of higher rates in the U.S. European stocks are also in the dumpster. Germany's Dax Index and the Euro Stoxx 50 Index dipped into bear territory recently, though both have rebounded a bit. The Russian invasion of Ukraine is weighing heavily on stocks there, and as several European nations are highly dependent on Russia for energy, their future economic growth is clouded. Surprisingly, the FTSE 100 Index, which tracks the 100 largest stocks on the London Stock Exchange, has fared relatively well. It's down just a bit more than 6% since its February high. The following chart illustrates all of this... [Lots of Bear Markets]( Among the broadest measures of global stocks is the MSCI ACWI Index, which tracks large cap and midcap stocks across 23 developed and 24 emerging markets. It's down about 14% from its mid-November high. And speaking of international markets, one international financial superstar has recently joined Manward Press. Alpesh Patel has hobnobbed with royalty, and he's brought his insights across the pond to the U.S. His investment strategies have earned him the title of the "[U.K.'s top stock picker]( If you'd like to learn more about what Alpesh can bring to your portfolio, [just click here](. Low Prices Create Opportunity But don't fret too much about this bear market (at least, not yet). Because what they say about commodities is roughly true of stocks... The solution to low prices is low prices. As stock prices fall, valuations (which have been sky-high for U.S. stocks for some years now) suddenly become attractive again. That's when investors bring their capital back to the market and bid stocks back up. Sure, there are other factors involved. Market volatility will remain high, and many indexes around the world will continue to drift lower, until the situation in Ukraine stabilizes. And investors will also remain wary of risky assets like stocks while that conflict continues to keep oil prices at elevated levels. Also, in recent years, central banks have stepped in and provided liquidity when stock markets dropped. In the U.S., we call that a "Fed put" or, when Alan Greenspan was Fed chairman, the "[Greenspan put]( The idea was that the Fed would set a floor below stock prices so they couldn't fall too far. Alas, that's not likely this time around with inflation around 8%. Yet as Chief Investment Strategist Alexander Green recently reminded us, [the stock market is the greatest wealth generator of all time](. "Over the long haul, nothing has rewarded investors more than a diversified portfolio of common stocks," he wrote. While bear markets come with the territory, over the long haul, the stock market goes in one direction: up. Invest wisely, Matt SPONSORED [Access the Money Tool Metric Typically Reserved for World's Richest ($10M+ Net Worth)]( There's a little-known money tool that was created by Deutsche Bank in the '90s... Which Goldman Sachs promotes to its ultra-wealthiest clients who have at least $10M in net worth... And now this coveted metric is being shared with everyday Americans - in a truly unique way. The Financial Times reports, "All investors should be aware (of this money tool)." [Click here for details.]( [The Oxford Club] You are receiving this email because you subscribed to Oxford Club Special Opportunities. 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