Bear Markets and Drawdowns

Jan 11 16:01 2019 Print This Article

The month of December 2018 was a bad month for the market; the rally in the last week of the month was nice but small compared to the month’s decline.  2019 has so far continued the upward move, so I thought it was time to show some data on market drawdowns.  If you have been reading my scribblings for long you hopefully recall that I view drawdowns as the best measure of risk.  Unlike modern finance that says volatility is risk and volatility is defined by standard deviation.  Hey, if you use standard deviation, then you are also agreeing that the markets are random and normally distributed.   In other words, they can be measured using Gaussian statistics and distributions.  If you truly believe that, you must not believe a thing I have ever written in this blog.  Furthermore, that belief is also aligned with believing that investors are rational, and all investors always agree on returns, risk, and correlations.  Again, this is just the nonsense of modern finance and hopefully a good technical analyst will understand why.

Read More

About Article Author

Stockcharts.com

StockCharts.com was founded in 1999 by Chip Anderson, a 10-year veteran of Microsoft. StockCharts.com is a website that provides online investors with high-quality financial charts for making better investing decisions. StockCharts.com is focused on Technical Analysis - the study of price history via charts. They provide award-winning analysis tools, market commentary from respected analysts like John Murphy and Martin Pring, and a huge collection of educational resources that can help anyone become a better, more informed investor.

Related Items

US REITs Suffer Biggest Weekly Loss So Far In 2019

Real estate investment trusts (REITs) in the US tumbled last week, posting the biggest setback for the major asset classes during the shortened trading week that ended on April 18, based on a set of exchange traded funds. The loss, the deepest for this corner of the market since a plunge late last ...

EUR/USD – Euro yawing on Easter Monday, but U.S oil sanctions could rattle markets

German banks are closed for the Easter Monday holiday and EUR/USD is almost unchanged. Currently, the pair is trading at 1.1249, up 0.03% on the day. There are no German or eurozone events on the calendar. In the U.S., there is just one release. Existing home sales is expected to slow to 5.31 mill ...

Macro Briefing: 22 April 2019

Death toll in Easter bombing in Sri Lanka rises to 290: CNNTrump administration set to end waivers for nations importing Iranian oil: ReutersOil prices rise as market prepares for end of Iranian import waivers: CNBCComedian Zelensky wins presidency in Ukraine: BBCHouse Oversight Committee Chairman ...

Daily Markets Broadcast 2019-04-22

Daily Markets Broadcast 2019-04-22 Wall Street extends gains on strong retail sales US indices continued to rally on Thursday after retail sales data for March came in higher than expected. The US30 index has continued the rally in early trading this morning. Markets were closed on Friday and many ...

Robinson Crusoe and the Carbon Tax

Suppose I impose a carbon tax on Robinson Crusoe. But I give him a rebate exactly equal to the tax he pays. That tax plus rebate will have no effect on Robinson Crusoe's behaviour. He knows that if he cuts carbon by 1kg, and pays $1 less tax, his rebate also falls by $1, so his net tax (= tax minus ...

Avoid Behavioral Biases and Make More Profits

Our built-in behaviors, which are unconscious, make us choose investments that will lag. The key is to do what we can to defeat these tendencies. • The more research we do, the more we convince ourselves of our rightness, and therefore the more overconfident (and wrong) we become. Fortunately, ...

April 17, 2019

On March 18 I reported: Assiduous Readers will remember that Manulife was bailed out by the regulators again after a hedge fund claimed the terms of its contract with the firm allowed it to deposit unlimited funds with the firm at a guaranteed rate of up to 5%. It turns out the bail-out was unneces ...

What are the pros and cons of investing in private REITs?

Q. Over the years I have done well investing in a private Real Estate Income Trust (REIT) and I wonder why they are not recommended more often by advisors. Am I missing something? And where can I find more information on REITs?– Jeff A. This is a great question, Jeff. For those who aren’t famil ...

The Hunger for Muni Bonds (And Gold!) Is Real

Another Tax Day has come and gone. Although it might be some time before we get the full picture of what Americans earned and paid in taxes last year, it’s probably safe to assume that the top 1 percent of earners shouldered most of the U.S. tax burden. In 2016, the most recent year of a ...

Barrick-Newmont Joint Venture Clears Regulatory Hurdles

(Kitco News) - An agreed-upon joint venture for Nevada mines owned by Barrick Gold Corp. (NYSE: GOLD; TSX: ABX) and Newmont Goldcorp Corp. (NYSE: NEM; TSX: NGT) has cleared all the required regulatory conditions, the two companies announced Monday. ...

Barrick, Newmont joint venture in Nevada clears all hurdles

Newmont Goldcorp (NYSE:NEM)(TSX:NGT) and Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD), the No. 1 and 2 bullion producers, have cleared all the regulatory conditions to combine their operations in Nevada ahead of schedule. The U.S. Federal Trade Commission, said the companies, granted an early termi ...