The variety of traders who beat the indices comfortably over both Bull and Bear markets are extremely few in number.
The Bear’s broken clock is finally best. Those clock hands stuck at midnight– well, it’s lastly midnight.
Bear markets are difficult, not just for Bulls however for Bears, too. Bearishness are treacherous since they are notoriously punctuated with rip-your-face-off rallies (RYFOR) that shred Bears’ luxurious earnings and handsomely reward buy-the-dip Bulls.
Then the markets unexpectedly roll over to new lows and the anguished weeps of margin-call-impaled Bulls rises strangely from the depths. Recently enriched Bears– the couple of who weren’t shaken off the Bear Bus by the repeated RYFORs– rejoice, just to be ejected from the Happy Seat by the next rip-your-face-off counter-rally.
Those playing both sides are wrung out by the churn, and while a couple of make fortunes, the bulk are whipsawed off the Bear Bus and the Bull Bus by the volatility and the soul-crushing anxiety of being incorrect yet once again.
Bearish market excel at absorbing Bulls at the peaks and Bears at the lows. When the relocation you have actually been wishing lastly manifests, the temptation to go all in and enjoy the gains for being best is tempting.
Right when greed victories, the market reverses and fear rushes in to crush the bliss. Bears may understand they’re right over the long term, however it’s dishearteningly challenging to stay the course as revenues vanish in rallies and the truly big crash that mints fortunes stays maddenly elusive.
Bulls see every support level and little good news as the much-anticipated juncture where the problem and the decrease lastly end. However the turning point is just as elusive as the penultimate capitulation crash. Everybody wants a clear signal that the Bearish market is over and the minute to purchase, buy, purchase is finally at hand.
However Bear markets aren’t quite so generous. The Bear is generous with incorrect signals, false bottoms and false rallies, and incredibly stingy with the-real-deal, this-is-it capitulations.
All the self-confidence acquired in long market melt-ups where buy-the-dip settled 100% of the time is gradually worn down by Bearishness. Buy the dip works for a couple of hours or a few days, but just the nimble reap the gains. Those playing with leverage discover the gains from 10 successful trades are eliminated by one trade that got away.
The Bear loves to dabble hope— hope for a turning point, for vindication, for capitulation and for life-changing earnings. The Bearishness enjoys teasing not simply the susceptible roller-coaster-riding psychological traders but likewise the pros and even the algo-trading devices.
The bursting crowds who beat the indices in the Bull market are minimized to a handful of laggers in the waning days of a Bear Market. Napoleon’s decimated, starving residues of a once-great army hobbling out of Russia enter your mind.
The number of traders who beat the indices comfortably over both Bull and Bear markets are really couple of in number. Booming market are easy, Bear markets are hard. They require a completely various experiential skillset than buy-the-dip Bull markets.
Recalling with the luxury of hindsight, Bear markets look like Paradise for the active trader: look how much moola might have been enjoyed by purchasing low and selliing high, again and again and again.
Easier stated than done, as my chart of the Anatomy of a Bear Market illustrates. What’s simple is being whipsawed and shaken off the bus.
That grizzled old wreck of a trader who mumbles incoherently about the 70s, 1987, 2002 and 2008? Listen to the ramblings, and ponder the runes and wanderings of the shattered mind. Therein lie the tricks to emerging not as a shell-shocked survivor however as the uncommon victor.
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