Using the S&P 500, there have been six bear markets between 1974 and 2000 ('76-'78, '80, '80-82, '90, and '98 ) and I have experience with each and everyone of them. I may be wrong but I can still be strong. The six bear markets lasted an average of seven months (median of three). The average and median declines were 26% from peak to trough. None of the bear markets went below the low of the prior bear market. Accordingly, a new cyclical bear could last into the summer. I'll just keep working a little longer pulling the pay cheque. If a new cyclical bear market results in a 20% decline, the DJIA could test 11,360 - chit we could be there in three days of trading time. The S&P should see 1260. An average 26% decline would suggest DJIA of 10,500 and 1165 for the S&P, which is also near the 50% Fibonacci retracement of the Oct'02-Oct'07 bull market move. Tom Wood could be right about the 4 year cycle being extremely extended and is now finally nesting. Id so, the move up out of this hole could be exhilarating. I'll be looking for dsivergences and the VIX might be one while everyone is waiting for obvious capitulation and a move to the prior high of August'07 or higher. Enter the panic stage. The desire for debt has turned into a stampede to quality, especially Treasury bills. The same folks who never predicted the economy would recover in 2003 are now cheerleading recession. Honestly, I can handle the pain that may further come my way, but to me this is an opportunity to build on my base and make my dividends work overtime - it's a strategy during times like these. The average U.S. stock mutual fund held 7.3% of assets in cash through the end of last year, the highest year-end figure since 2000. I've seen statistics on some that are holding 30-40 percent cash and rates are dropping. There are so many reason to remain positive and take opportunity.
