Congratulations! It's a Bear!
Mar 01 2001
When the stock market seems particularly subjective and psychology-driven, it's nice to have a few number-based definitions on hand. For instance, a "bear market" is commonly described as a 20 percent stock drop. Guess what? Not only has the Nasdaq dropped much more than that, but some calculate that the S&P 500 hit the 20 percent mark Wednesday. This did not go unnoticed amid news of the Nasdaq's new 26-month low and the latest round of Greenspan-bashing.
CNN's Moneyline News Hour show summed up the increased panic. "The Nasdaq has been in a bear market for months," said CNN correspondent Fred Katayama. "But a bear market in the S&P would affect far more people than just day-traders and high rollers." It's not just dot-commers' retirement accounts losing money - was it ever? - so maybe we'll soon see a merciful end to the smug tone that has been accompanying bad economic news.
The Washington Post gave another reason why a bear market in 2001 would be particularly rough. "In an economy where stocks play a substantial role in dealmaking, compensation and savings, the repercussions of a deep and broad-based decline in stock prices are likely to be greater than in the past," said the Post. People watching their portfolios tank, for instance, will feel poorer and spend less money.
If the bear surprised you, you're not alone. "Quietly and largely unnoticed, a major shift has occurred on Wall Street," said the Washington Post, referring to bear speculation and a gradual loss of investor optimism. "You mean people are just now realizing it?" asked Michael Metz, New York Post source and "legendary bear" market strategist. Business Week also scolded, "Investors sure took their time recognizing the signs of a significantly slowing economy."
Business Week's Margaret Popper took a stab at explaining the mass ignorance, partially blaming new economy "fallacies" like "the tech sector is immune to business cycles" and the idea that layoffs are good because they "reflect increased productivity." Today, said Popper, we're back to normal, "bad news isn't good news anymore," and the market has reacted accordingly.
So did anyone actually see this coming? TheStreet.com's Aaron Task gave a nod to investment pro Brett Gallagher, who predicted back on Nov. 30 that the market hadn't bottomed out yet. That was when the Nasdaq was above 2500, and before early December's short-lived, Greenspan-inspired market rally. "There's still more downside to go," Gallagher told Task on Wednesday.
The slumping market brought the usual debate: Go bottom-fishing, or stay out of the water entirely? Do what you want, since you'll find some pundit to back your decision either way - and an equal number to sneer if you get it wrong.
Market Movers: Still Searching for That Bottom
The Industry Standard
Bear Sightings on Wall Street
Washington Post
Finding Your Feet After Topsy-Turvy Times
Business Week
It's a Bear Market
New York Post
Tough Love: Greenspan Does the Right Thing by Not Giving In to the Market
TheStreet.com