Monday, May 14th, 2007
Ken Fisher’s 8 bear market tips
I don’t want to bang on about one book too much, but Ken Fisher’s book The Only Three Questions That Count: Investing by Knowing What Others Don’t, is worth exploring in detail.
He has an excellent chapter on bear markets. Here are eight key points to come out of it:
1. There has never been a bubble widely called a bubble before it burst
2. Most bear markets last about 18 months
3. One-third of declines in a bear market occur in the first two-thirds of it. That means the steepest falls come in the last part. This is important because, as Fisher notes, most bull markets roll over rather than end sharply
4. Bear markets often end in V or W bottoms
5. Bear markets decline between 1.25 per cent to 3 per cent (or around 2 per cent on average) per month. So declines bigger than that could indicate it is a bull market correction
6. A correction defies the 2 per cent rule and is characterised by a 10 to 20 per cent short, sharp drop, which comes from nowhere and is supported by a ‘fantastic bearish story.’
7. If you’re bearing more than 3 to 4 times in two decades you’re overdoing it!
8. A fellow Forbes columnist Joe Goodman said investors should wait 3 months after you suspect a bull market peak has happened before selling
Word Count: 217. This entry was posted on Monday, May 14th, 2007 at 10:24 am and is filed under Ken Fisher, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
May 15th, 2007 at 3:41 am
“Forbes columnist Joe Goodman said investors should wait 3 months after you suspect a bull market peak has happened before selling” - you gotta love it.
May 16th, 2007 at 7:37 am
[...] $ Ken Fisher’s 8 Bear Market Tips [...]
May 30th, 2007 at 1:15 pm
I have to agree that there could be a few disasters (or at least a less than optimum result) if some trader followed the 3 months quote rule religiously… “investors should wait 3 months after you suspect a bull market peak has happened before selling”
I’ve never thought there were any time frames really when it concerns the best time to sell after a bull market peak. You’ve outlined better reasons to sell in your other articles than what Joe Goodman has advised with that quote above. To each their own I guess.