Episode 481: The Glory of Bear Markets

Today’s Dividend Cafe is sort of the reason the Dividend Cafe started. I didn’t call it Dividend Cafe back then, I didn’t have a website for it, I didn’t post it on social media, it wasn’t re-published on a multitude of financial websites, there was no podcast, there was no video, and it didn’t have nearly 20,000 subscribers. In fact, there couldn’t be any “subscribers” because there was no organized list – just me sending an email from Microsoft Outlook manually to clients I thought would like to hear what I had to say. And the catalyst? A bear market.

The week I began doing this “weekly commentary” we were not in an “ordinary” bear market. In a ten day span Fannie and Freddie had been taken over by the government, Lehman Brothers had declared bankruptcy, AIG had gone down, Merrill Lynch ran into the arms of Bank of America, and my own firm at the time, Morgan Stanley, was in its own existential (but soon to solved) crisis. Mortgage bonds were collapsing, housing prices were utterly collapsing, and yes, the stock market was in freefall.

Today I write to talk about bear markets. Not societal collapse. Not the mother of all credit implosions. Not a deep and unbearable recession (the “great” recession). But bear markets. The kind where stocks drop and investors do one of two things. We are going to talk about those two things, and I hope when you are done reading you will not merely feel better about this bear market, but even just a little bit excited (as counter-intuitive to human nature as that may be).

So let’s jump on in to the Dividend Cafe, as it does what it was always created to do – present the unvarnished truth in matters of macroeconomics and investor behavior, and do so towards the greater end of the very purpose for which we at The Bahnsen Group work.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com