March Stock Rally Doesn’t Negate The Risk Of A Bear Market

A March stock market rally is likely, but does that mean the risk of a bear market is over?

So far, 2022 has been challenging for investors who got lulled into complacency since the March 2020 lows. The massive deluge of liquidity flooded financial markets, providing an effortless trading environment for inexperienced investors.

In “Retail Investors Are Long On Confidence,” we quoted Jason Zweig:

“As surely as the sun rises in the east, promoters will be touting these returns. A small-stock fund manager who’s up 40% over the past year can hype that gain in ads and on social media; 40% is a big, beautiful number! Only by reading the fine print would you be reminded that a 40% return underperformed the average by more than 10 percentage points.

You knew I would tell you this but I’m saying it anyway. These returns won’t last indefinitely. Enjoy them while they last, but you’d be crazy to count on such giant gains becoming common.

At times like these, grounding yourself in realistic expectations is more important than ever. Working in the garden also reminds me that market cycles, like nature’s seasons, can be extended — but not rescinded.”

The biggest problem for most young investors is the lack of research on the stocks they buy. They are only buying them “because they were going up.”

However, as Jason notes, when the “season does change,” the “fundamentals” will matter, and they tend to matter a lot. Such is something that most won’t learn from “social media” influencers.

As of late, with stimulus checks gone and many of the high flying stocks of the last two years decimated, the “season has certainly seemed to change.”