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Mark Hulbert: Why the next bear market could shave 35% off the Dow

Predicting when the next bear market will occur is notoriously difficult. Just ask stock-market timers. But what about predicting the severity of the next bear market?

That has become a pressing question of late, since Wall Street has shifted from whether a U.S. recession will occur in the next 12-18 months to when. A bear market for stocks is almost certain to accompany an economic downturn. By one measure, the Dow Jones Industrial Average DJIA, -0.07% would suffer a particularly steep decline.

To find out whether a bear market’s severity can be forecasted, I analyzed all bear markets since 1900 (according to a bear market calendar maintained by Ned Davis Research, the quantitative research firm).

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