17 Aug 2001 The Bear

Bear markets turn investor strengths into liabilities and this insidious beast is no exception.  The aftershocks of the ‘Internet Bubble’ make this crash all the more difficult.  What we held as strengths before the collapse in confidence have become liabilities.  During Bull markets, long-term investors are rewarded for holding good companies in spite of brief stock pullbacks that occur when short-term investors are frightened off by negative news.  Investors with longer views snap up the bargains left behind, believing that the news has limited or no long-term relevance.  Alternatively, bear markets lack clarity or visibility of the future, making it difficult or impossible to know whether the effect of negative news is short lived or has longer implications.