25. Bear Markets

Just whisper the phrase “bear market” at your next social gathering and watch the crowd part like the Red Sea. Before the turn of the century, most people had heard about bear markets—when prices actually fall—but had not experienced one first hand. For the stock market, the “Crash of 1987” was the defining moment when the world seemingly was about to end. But when we look at charts of the market, we can quickly see that although the decline was real and significant, it was merely a speed bump in what turned out to be the great bull market of the late 20th century.

Of course, the real bear market people talk about, the one that began with the 1929 crash, was one where the market not only fell by a significant percentage ...

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