This week, I’m talking about 5 mistakes that smart investors don’t make in bear markets.

Today, I’m talking about mistake #4 that smart investors don’t make - misunderstanding market cycles. 

Understanding the emotions that define market cycles is very important. Market emotions tell you when we’re near or at the top, and when we’re near or at the market bottom. The key is spotting those emotions and taking advantage of it. 

Market bottoms are defined by pessimism, followed by panic, followed by capitulation (or surrender). Market bottoms - all of them by the way - are marked by feelings of hopelessness and depression. It’s palpable. 

In March of 2009, 18 months into the stock market downturn of the Great Recession, the unemployment rate was still climbing, millions of Americans had already lost their homes, and the stock market had lost half of it’s value. 

Yet, on a random day in early March of 2009, the stock market hit bottom and started it’s slow and steady climb for an incredible 11 year run since that time. An article from CNNmoney.com on March 9th, 2009 reads: “Stocks tumbled Monday, with the Dow and S&P 500 ending at fresh 12-year lows, as Merck's $41 billion purchase of Schering-Plough failed to distract investors from worries about the economy….The S&P 500 (SPX) index lost nearly 7 points or 1%, to end at 676.53, its lowest point since Sept. 12, 1996….‘We're seeing more of the same," said John Buckingham, chief investment officer at Al Frank Asset Management. "With an absence of good news, the path of least resistance is down."

In this one news article, you can feel the surrender, the hopelessness, the throwing up of the hands in just the simple observation of “well, it’s another down day... just more of the same.” That’s all the commentator had to add that was noteworthy - more of the same. 

Yet on this day - March 9th, 2009, the stock market hit bottom, and began one of the greatest and longest bull market runs in history. 

When you understand the emotions that define stock market bottoms, you can more clearly see them for what they really are - not more of the same, but an incredible buying opportunity. 

That’s it for today, thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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