Bubble

Economics

When will the Bear Return?

If the S&P 500 were currently on its long-term regression line, its value would be 2,439.  Let that sink in!  The S&P 500 as of 10-22-2026 is 7663 or simply put a decline (7663 – 2439) ÷ 7663 x 100 = 68% (rounded) only to return to its average!  WOW!  

Using the 2009 decline as a proxy this would place the S&P 500 at 1683 (rounded) or for a total decline (7663 – 1683) ÷ 7663 x 100 = 78% (rounded)!

My suspicion, my guess, or asking the magic 8 ball; this up and coming decline will be a multi-year along with many fast and furious soon to fail rises as the bear keeps as many participants in stocks riding all the way to the bottom.

The never ending mantra is to buy the S&P 500 index and let the market Gods produce their bake-in-the-cake 10% plus market returns forever!  We the people of mere mortals have (average individual) any where from two to four decades – to put it all together for retirement.  When the bear returned as it did from the year 2000 to 2009 many had to postpone retirement and had to return back to work or face running down their nest egg significantly.

After 50 plus years of investing and talking to individuals of different levels of financial expertise; I’ve come to this conclusion; for the vast majority, their core fund should be The Permanent Portfolio Fund (PRPFX).  The funds excellent downside protection through its fixed percentage of non-correlated assets and yet is able to capture three quarters of the long term return of the S&P 500.

To illustrate:  The biggest drawdown for the Permanent Portfolio (PRPFX) was 27.16%, which occurred from May 2008 to November 2008 (or peaking around November 20, 2008).  However it took only 1.4 years (or 221 trading sessions) to recover its previous high.

The S&P 500 greatest drawdown: -56.8% (peak-to-trough drop from October 9, 2007, to March 9, 2009) requiring 5 years and 5 months to regain its previous peak; highlighting the significant difference.

People talk the talk of being that “long term investor” but when the manure hits that rotating fan the vast majority will run to the hills locking in large percentage losses.

Just as Dave Ramsey and those before him especially Silvia Porter both have one thing in common – your income is your greatest wealth building tool.  Debt free and living significantly below your means, investing wisely you’ll achieve financial security (no matter what those bastards in Washington DC throw at us!).

Till Next Time!