
WHAT THE BULL GIVETH, THE bear taketh away. Investors who thought the bear market might be over after summerâs strong gains got a reminder this fall that bear-market rallies can be exhilarating but fleeting. Following a 24% drop from the record high in January through mid June, the S&P 500 index rallied 17% through mid August, only to fall again, under-Â cutting its June low. On October 7, the broad-market benchmark was down 16% from its summer peak, and it was again 24% south of its January high.
Welcome to phase two of the bear market, says Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. We could be entering what is often the longest phase in the marketâs bottoming process, notable for the kinds of zigs and zags weâve been living through. âFor investors, the consolidation phase will likely present the biggest test of emotional fortitude and investment discipline,â Samana says. âSharp rallies may present a siren song of opportunity that will try to entice investors with the promise of quick gains, only to be dashed quickly by disappointments that lead prices back to the lower end of the trading range.â
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