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.

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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.

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