Somewhere along the line, someone got out a calculator and concluded that a typical bull market lasts about two and a half years, while a bear market lasts about a year, on average.
So if you see an article in a financial magazine about the start of a new bull market, they might suggest keeping your money in stocks for at least two years. If they see a bear market coming, a market professional might suggest staying in cash or bonds for twelve months or so.
A little problem: History shows examples of when bull and bear markets did not follow the presumed average.
If investors bought a year after the South Sea Bubble collapse in 1720, believing they'd catch the start of a new bull market, almost all of them would never live to see the day when their investments paid off -- if they ever did. Look at this 300+ year chart from EWI president Robert Prechter's Conquer the Crash (now in 2nd edition). As you can see, stocks and the economy remained depressed for 64 years after the crash:
"In the 1720s, extreme over-optimism developed in what came to be known as the South Sea Bubble, which Mackay (1980) described in his work, Extraordinary Delusions and the Madness of Crowds. The social mood retrenchment from the South Sea Bubble ended in 1784, a 64-year period of retrenchment that should give pause to those with a buy-and-hold strategy."
-- Bob Prechter, The Elliott Wave Theorist, June 2001.
Now, notice the last labeled leg of "Prosperity" on the chart. See how long that uptrend lasted without a major downturn? Not your "typical" two-and-a-half-year run!
Which leads us to where we reside now. In a May 20 interview, Bob Prechter said, "We are on schedule for a very, very long bear market period."
How long? Bob gives you direct answers in his latest special two-part Elliott Wave Theorist, along with reasoned analysis and ideas based on capital safety.