Will this be known as the great "head fake"

There have been numerous bear markets. Will this be known as the great “head fake”?

There have been recessions, depressions and simple bear markets. In the “this is new” department we have the current bear market.

There will be races to name this one. I suggest “the great head fake”.

We had a stellar bull market. Then there was the covid, and after that a very short-term correction in March 2020. The S&P 500 posted the biggest first-year gain for the S&P 500 since 1945, according to CFRA Research data.

Then everyone piled on. LOL. When there were hiccups they bought the dip. After all, the market will correct in a couple of weeks and continue upwards and onwards was the chant.

But it was an illusion. Which is why I call it the greatest head fake in modern stock market history. I realize there are those who consider the Dot-Com bust to be even greater.

When everything goes up and even an idiot can make money in the stock market, it is time to pause and reflect. I did.

And then there was the morning after hangover. But the true believers continued to “buy the dip” and continue to do so even today.

I don’t fault them. After years of education by a bull market, and a very short term reset to the stock markets via covid, well, why not allow our cognitive bias to steer us over the cliff? And some have.

But this too will pass. Long term there will be another boom market, and another, and another. But in my lifetime I have about 20 years to get an education, 20 years to build a married life and pay for the kiddies, and 20 years to finalize my retirement savings. That may not be long enough when the bear shows up.

One solution is to work longer, as long as age 75. I suspect that is unpalatable to the generation X, Y, and Z who are planning early retirements.

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