What might the next bear market look like for investors?

What might the next bear markeat look like for investors?

Great piece from Ben Carlson where he poses & answer 6 questions about the next bear market. He begins by putting things in perspective, then looks at how various areas may react in the next bear market.

 

How bad will things get?

In fact, the median drop was 26 percent. A crash is always possible, but your baseline for a bear market shouldn’t be a huge meltdown

Will emerging markets outperform the U.S.?

Grantham’s view is that the relatively undervalued emerging markets should hold up better in a downturn than the relatively overvalued U.S. shares. This is a development most investors likely aren’t positioned for if they’re basing allocations on historical risk-reward characteristics.

Will managed futures provide positive performance in a down market again? …Managed futures were one of the few strategies that held up well in 2008 when everything else got hammered by providing positive returns during a market crisis. According to the BarclayHedge CTA Index, these funds were up more than 14 percent even as stocks around the globe fell 40 percent or worse for the year.

Will commodities provide diversification benefits?
Like most risk assets, commodities fell off a cliff during the financial crisis. But unlike these other assets, commodities are still languishing far below their highs from the previous peak.

How will cryptocurrencies react? ..The rise in cryptocurrencies has corresponded with a bull market in stocks. And while cryptocurrencies have experienced a number of bear markets and crashes over the past few years on their way to remarkable gains, we have yet to see how they will handle a bear market in stocks.

 

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