Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
Login Archives Your Team About Us FAQ
[mmpazkzone name="azk58712-mobile-nav" network="9794" site="307044" id="222451" type="5"]
  • Subscribe
Enter stock ticker or keyword
×
[mmpazkzone name="azk58712-mobile-sticky" network="9794" site="307044" id="222451" type="5"]
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Market Crash

Bear Market Definition and Survival Guide for 2016

By Cameron Saucier, Associate Editor, Money Morning • January 26, 2016

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

Bear-Arrows-Down-SMInvestors have been hearing about an impending bear market since mid-January. That's because the Dow Jones Industrial Average tanked nearly 8% in the first 10 trading sessions of the year.

Interestingly enough - there is no set bear market definition. Although, most investors agree a bear market definition says an index must drop 20% over a two-month period to be considered a bear market.

We haven't quite hit that point yet, but the Dow Jones is now down 12.4% from the highs it hit in May 2015.

And even though we haven't hit that 20% threshold yet, Money Morning experts believe the bear market is already here. Despite what other bear market definitions might say...

"More than 50% of S&P 500 stocks are now down 20% or more from their 52-week highs - and it is now a question of how loud the bear growls," Money Morning Global Credit Strategist Michal Lewitt said.

The pressures of China's slowing economy and its volatile stock market have been pulling down markets here in the United States.

"China is a house of cards whose debt-engorged economy hit a wall in mid-2014 after seeing its total debt grow from $7 trillion in 2007 to $28 trillion (it is now probably over $30 trillion)," Lewitt said. "This then caused global commodities markets, which were inflated by the Chinese debt explosion, to collapse."

China, however, isn't the only reason we're in a bear market.

"The last piece of the puzzle was the end of the Federal Reserve's quantitative easing (QE) program in October 2014 and the beginning of its effort to raise interest rates in 2015," Lewitt said, "though this didn't occur until last December and is more likely than not to be reversed in 2016 if markets continue to sell off and the U.S. economy continues to weaken."

And the bear market definition goes beyond just a percentage drop. It also has a lot to do with the mindset of investors...

According to Money Morning Chief Investment Strategist Keith Fitz-Gerald, this bear market is being driven by fears of a weak U.S. and global economy.

"The markets are all about sentiment," said Fitz-Gerald on the FOX Business Network. "They're a forward-looking animal and they're all about certainty or uncertainty, and traders now are uncomfortable with that."

Despite all of these negative developments, investors still have a unique advantage in the markets.

"Institutions have to keep their money moving," Fitz-Gerald said. "Good, bad, or ugly, they have to continue to trade. Individuals can be very careful and very selective."

That's why we've developed a guide for investors to protect their money, and even profit, when we've met the requirements of our bear market definition...

Our Bear Market Definition Has Been Met: Protect Your Money Now

Even when stocks are being battered, investors can still make money.

Money Morning Options Trading Specialist Tom Gentile helped his subscribers post a 100% return in the first week of the year, when the Dow declined by more than 900 points.

"The bull market's end gives traders the juiciest opportunities ever," he said.

Every week, Gentile discusses his favorite market plays. Check out his trading strategy here.

Like Gentile, Money Morning Capital Wave Strategist Shah Gilani favors short-term plays during market downturns.

He likes three exchange-traded funds (ETFs) that track the inverse performance of major indexes. These inverted ETFs gain as stock prices decline. Gilani also likes four short-term investments when markets are falling hard during a specific day. Get all of his picks, right here.

For a more long-term approach, Fitz-Gerald favors investing in high-quality stocks that sell products the world can't live without. These are positions that you plan on holding for the next five to 10 years.

"In tech, that includes names like Facebook Inc. (Nasdaq: FB), Apple Inc. (Nasdaq: AAPL), and Alphabet Inc. (Nasdaq: GOOGL)," Fitz-Gerald said. "And select companies like The Coca-Cola Co. (NYSE: KO) that have a long history of increasing dividends through thick and thin. Also, put new money to work in companies like Raytheon Co. (NYSE: RTN)."

Fitz-Gerald explains that stocks like these aren't speculation; they're dependable investments based on solid earnings reports and balance sheets.

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

"As long as you're investing money that you won't need to spend in the near term and keep risk management top of mind, you can weather a downturn," Fitz-Gerald said.

Stay informed on what's going on in the markets by following us on Twitter @moneymorning or liking us on Facebook.

Protect Your Money in This Bear Market: It's true that you would have to be a fortune teller to know exactly when a bear market would start and end. But fortune telling isn't Keith Fitz-Gerald's profession. His goal is to protect your wealth, maximize gains, and help you focus on what's really going on in the market. In his Money Map Report, this financial guru has used his years of experience as a trader in one of Wall Street's leading firms to help his readers find 86 double- and triple-digit winners. You can learn more about Keith's Money Map Report here...

ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us How Money Morning Works FAQs Contact Us Search Article Archive Your Team Text Messaging Terms of Use
TOPICS
AI Investing Best Stocks to Buy Stock Forecasts Stocks to Sell Now Technology Stocks Best REITs to Buy Now IPO Stocks Penny Stocks Dividend Stocks Cryptocurrencies How to Trade Options Best Trades to Make Now Options Trading Strategies Weekly Trade Recommendations Income Investing Guide Retirement Articles Special Investing Reports Meet Our Experts
PREMIUM SERVICES
Money Map Press Home Fast Fortune Club Microcurrency Trader Rocket Wealth Initiative Quantum Data Profits Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information