Bear Markets: This Time is Different (Every Time)

Bear markets are generally defined as a peak to trough decline of at least 20% in the stock market. Bear markets are not fun to live through, but they should be expected from time to time. Uncertainty about the future drives asset prices down, and it usually feels like things will get worse before they get better.
Referenced in this video:
- Real Shock, Monetary Aftershocks: The San Francisco Earthquake and the Panic of 1907: www.econstor.eu/bitstream/104...
- The Panic of 1907: www.federalreservehistory.org...
- Stock-Market Crashes and Recessions: www.nber.org/papers/w14760.pdf
- U.S. Stock Market Crashes and their Aftermath: Implications for Monetary Policy: www.nber.org/papers/w8992.pdf
- Japan’s Financial Crisis and Economic Stagnation: pubs.aeaweb.org/doi/pdfplus/1...
- “Lost Decade” in Translation: What Japan’s Crisis could Portend about Recovery from the Great Recession: www.imf.org/external/pubs/ft/...
- Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu: papers.ssrn.com/sol3/papers.c...
- Judgment under Uncertainty: Heuristics and Biases: www2.psych.ubc.ca/~schaller/P...
- Myopic Loss Aversion and the Equity Premium Puzzle: www.nber.org/papers/w4369.pdf
- The 5 Largest Economies In The World And Their Growth In 2020: www.nasdaq.com/articles/the-5...
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[@nvass99]

In my eyes, Japan's stagnant market is the strongest example of why global diversification is paramount.

[@modernexistence4206]

Why is their economy so stagnant?

[@gimmick206]

@@modernexistence4206 it's not, stock market growth doesn't equal economic growth

[@brendon5350]

Truly one of the best finance channels out there. Academic and fact based.

[@joaofleumatico]

I found this channel yesterday and expected to be another clickbait "day trade course" but it's not that at all

[@ba8898]

Agreed. Some of his videos are a bit too complex and technical for me but as an academic I like that his arguments are always research based.

[@corneliuspuder2695]

Your ability of pushing out content like this every other week shows that your knowledge about these topics has to be outstanding! Thank you so much for your effort! :-)

[@anonymousinvestor9593]

Ben is awesome... one of few... stick to a strategy, don't get emotional. Just published my 3 month strategy for my $1M portfolio on my channel.

Finally an expert opinion on current situation.

[@James-il3tq]

Every video Ben does he says the same thing - diversify, diversify, diversify. If you're looking for a conservative investment strategy that limits downside risk and are satisfied with 6% then Ben's advice is solid. Good for basic investors that are happy with index investing, which also has its risks (see etf investing risks). Nothing is risk free and remember the more you diversify the less risk you take but also, less upside on your investment.

[@James-il3tq]

Basically Ben's whole point every video is invest in a super diversified portfolio like VBAL or VGRO. For most that's fine. For people who are willing to take on more risk and do more work and research, there's better channels out there.

[@christopherrussell6055]

James any recommendations on more channels to follow?

@@James-il3tq any suggestions?

[@anonymousinvestor9593]

Yes. Many of my principles for my $1M portfolio are similar.

[@mircoc2357]

I forgot to say a thing...that is the absolute best feature of your contribution.... your videos are not based on speculations, but based on research (most of which awarded with a nobel prize!!....) and that is the real breakthough for me.... I mean finally all the talking about investing is cleared out and what is left is a clear, understandable video that any average people can easily understand. This is why I want to thank you again and hope your channel reach the amount of subscribers it really deserve !!!! ciao

[@michaelsmith4904]

didn't Black-Scholes get a Nobel prize, yet it's flawed in how it deals with tail risk?

[@BenFelixCSI]

On reflection I think the example at 5:00 is a bit of a stretch. The US stock market crashed in 1917 before the Spanish Flu was widely known. There were outbreaks in France and England around the time of the US market decline but those outbreaks were not identified as Spanish Flu until much later. The US didn't start implementing non-pharmaceutical interventions like social distancing and business closures until later in 1918. The market decline could be attributed to other economic issues: _However, it would appear that the fall in share prices may be attributed in part to generally rising interest rates and controls on new capital issues. Furthermore, there were strong efforts to divert financial resources to the purchase of government bonds to the finance the war (Friedman and Schwartz, 1963)._ It is still interesting to note that despite the global economic impact of the flu, the market did not take a hit when the flu reached its peak in 1918; it continued its recovery from the 1917 decline. This part was accidentally cut. It would have been at 14:13: _I mentioned earlier that from 1900 through 2019, global stocks delivered a 5.2% annualized inflation adjusted return. With US inflation of 2.9% over the same period that’s an 8.1% annualized nominal return. That figure includes the Japan situation that I described, and it also includes the failed, failed as in went to 0, markets of Russia and China, and the unsuccessful markets of Austria and Portugal._

[@adonisds]

What happened in Austria and Portugal?

[@BenFelixCSI]

@adonisds I don't have the full data set but from the Global Investment Returns Yearbook Summary Report www.credit-suisse.com/about-us-news/en/articles/news-and-expertise/esg-investing-a-trend-that-is-constantly-evolving-202002.html _Similarly, we also added Austria-Hungary, which had a 5% weighting in the end-1899 world index. While Austria-Hungary was not a total investment disaster, it was the worst performing equity market and the second worst performing bond market of our 21 countries with continuous investment histories. Adding Austria, China, and Russia to our database and the world index was important in eliminating non-survivorship and “unsuccess” bias. In 2014, we added another “unsuccessful” market, Portugal, to our dataset._

[@Vkob]

@@BenFelixCSI Global capitalism has been a triumph of demonstrating the tragedy of the commons as negative externalities end life as we know it through climate change. Sorry Ben... This video didn't leave me with any confidence in buy and hold right now.

[@adonisds]

@@BenFelixCSI Thanks!

[@edwardmauer7442]

Is this with or without dividends reinvested?

[@pygaming956]

Long term Brazilian value investor here: Man, your videos make it harder to stick to stock picking 😂. Keep up the good work!

[@user-qi6sm1bg9y]

Love your vids!! You are so professional, thank you.

[@ojaott]

Just commenting to help great videos spread. Thank you, Ben, for all the work and analysis you put into your video.

[@ryanmaharaj1217]

Hi Ben - thanks for the content overall but especially the last few weeks. Your clarity, tone, production quality and topics always are spot on!

[@MattPukas]

Rule #1: Never lose money. And how do you maintain that? By not selling, even through bear markets.

[@davet6599]

Matt Pukas That is Buffett's No. 1 rule.....that he just broke!

[@MattPukas]

Dave Thirkell he did! He sold some of his Delta airlines stake right?

[@davet6599]

Matt Pukas Yes, I just read that yesterday. Worrying for investors when he is doing things like that!

[@brettharter143]

Hes old remember, at that age people can make bad decisions at the brain changes. He wont be able to drive soon

[@CC-jy4gr]

This works in those situations where the company doesn't go bankrupt and delist its share.

[@lordepl]

Ben, are the most clear and data/fact driven youtuber on finance! It's good to know what you think!

[@TomWallischh]

This is insanely well done. Thank you very much!!

[@iulianaciucurel8488]

Your clear and concise way of presenting makes it so easy to understand the content. Thanks 😃

[@maryankitsenko9694]

Ben Felix and The plain bagel - these are the two channels about finance/investing that deliver enormous amount of value and insights. Gentlemen, well done!

[@harvey1965]

Really enjoy listening to Ben. Thanks!

[@firefighterps2]

I'm grateful to have found your channel. Sensible, well informed content. Thank you Ben.

[@dimitribiemond]

Love the channel, thank you for all the videos

[@alecgalbraith5604]

I can always count on Ben being level headed. Appreciate the videos!

[@blakutnuj]

Ben the Man is back with high quality info. Watch and learn. The best free personal finance education out there!

[@squishtomar1676]

Even better than the majority of paid PF education IMO

[@erichartman5996]

Wow I so value your calm and well-presented information. Thank you!!

[@PierceJordan]

Awesome video congrats on 100k!

[@laurentrigoreau5777]

Great video, stay the course, don t panic. Thanks for these historical data that help to put things in perspective.

[@joelthorne7434]

Incidentally, I recently came upon your videos and podcasts while researching the topic of dividends-Thanks for the much-needed education!

[@illya119]

This is really good. I love that you reference scholarly sources. Thank you

[@justalettertooshor]

Extremely happy to see Ben putting out quality content with real facts compared to all the other fear-mongering “is this the end of everything as we know it??” content that’s been hot recently. Thank you for consistently putting up real information and not speculative garbage.

[@josephabraham4058]

Ben "I Canada So Hard" Felix. A rational man with unmatched rationale. Ben "My History Began When The Market Began" Felix. A massive natural disaster, macroeconomic troubles, and a financial crisis... an abridged statement of today's global market conditions where natural disaster is a virus brought forward from the 1900's to today. I'm your #1 fan.

[@CC-jy4gr]

ben and joseph in a maple tree

[@CaseyCJL]

japan had 45% share of the worlds public equities before the 90s???? that shocked me.....

[@johnvelazquez9854]

This was so concise and enlightening! Thanks so much.

[@mbabcock111]

Absolutely fantastic job Ben! Thank you for your time and research in this tumultuous time. BZ,

[@galaxytrio]

Thanks, Ben. Well-presented and useful info as usual

[@t.p.9550]

this is the definition of quality video. Thanks!

[@mortenjacobsen2472]

This is turning into my favourite KZbin channel. The last month's financial uncertainty has been challenging and sticking to my strategy has been difficult. Thanks.

[@GuppyPal]

Another excellent video. Thank you so much for these. They are very helpful.

[@solaire9512]

Great video as usual Ben. Thanks for your obvious hard work and impartial fact based content.

[@rumpelr]

Oh wow! This is so informative and exactly the information I needed. Uncertainy surly is scary.

[@LouisWilen]

Excellent, reassuring video Ben. Thanks for the historical perspective.

[@anthonygardner400]

You continue to amaze, Ben. Thanks for being a trusted voice of reason during these crazy times. Be well.

[@pedrogarces6876]

Well done! Amazing analysis and commentary. Best KZbin channel with practical facts and insights.

[@jeffory]

Just learned that Ben is 6’11 and played NCAA ball.

[@BenFelixCSI]

That is true. Don't look at my stats though :)

[@Sethnaca]

Ben Felix How tall is your coworker / associate in your Rational Reminder podcasts? Cause holy crap 6’11” is insane.

[@ZenoxDemin]

@@BenFelixCSI Your FT% is the same % as Cramer's investments advice.

[@centralnyguy37]

@@ZenoxDemin You know what the really funny part about Cramer's investment advice is. He gives it out with such confident, nuanced, assurance. The dude has major Dunning Kruger issues.

[@1maybeline]

Ben, you're a smart stud! 👍😍

[@attentioncore]

Great content, thanks Ben!

[@qq798830597]

My favorite channel . True wisdom !

[@grantmaxted1160]

Thanks, Ben. This one has gotta be in the top few percent of your videos. My favourite line. “Uncertainty is tough for us humans”. Indeed.

[@Cardifftoyboy1]

Very comforting and honest words...Many thanks Ben from Devon England.

[@401ria3]

All roads lead back to small cap value!

[@clarifyingquestions]

What does this mean?

[@Bigboss-xe6lm]

@@clarifyingquestions I think it means you need to own both big and small cap companies if you want to diversify right. Total market small cap + big cap in other words. Owning 5% of small cap disruptors might also be a smart thing to own. Tesla was one of those a few years back, Illumina as well

[@mackerel2002]

The question is how? I would love to have more small cap value sticks on my portfolio but i don't know a good etf.

[@sethspringer5843]

Luke mc govern SLYV, VBR, IJS, VIOV, etc.

[@CC-jy4gr]

buy the whole market

[@Beakerandgreg]

Thanks for that, Ben!

[@dolevmazker736]

Absolutely amazing content

[@squishtomar1676]

It's nice to see people outline factual information on historical bear markets. With a level head. Thank you Ben

[@volcanpvp5704]

Excellent video, subscribed.

[@ronie6773]

Good quality content. Thank you 😊❤️

[@ElektrikaCo]

What a great video! It is nice to see content on behavioral economics. I'm currently reading Thaler's "Misbehaving" and find it fascinating. I think the behavioral side is just as important as quant models. I would love to see more content on behavioral economics and finance.

[@RebeccaEvans]

The delicious useful density of your videos is the equivalent of 100 hours of fluff on other shows. And yours are sourced.

[@RonNewmanPiano]

Ben, if you read this, I love the conciseness of your information. I hate the intro music. I skip the first minute and a half to avoid it, and also to avoid being told what I have already read in the title. No intro needed, we can tell what the video is about and who you are from the title and written parts. I have subscribed.

[@dannymao6353]

Been waiting for this video for so long. :)

[@relayernj]

Great video Ben! Thank you!

[@adonisds]

Thank you for all the valuable advice

[@trs8696]

woah new ben felix and dragon's den uk videos up in the same fifteen minutes, corona life doesnt get any better than this!

[@lucasvasconcelos9156]

Nice vídeo! It would be interesting to see emerging markets data too.

[@anonymousswimmer4010]

Love all your videos, Ben! You are one of the only trustworthy voices on finance. I look forward to these videos every week - please keep it up!

[@julianschmahl8267]

Considering the FED is dropping interest rates and there is a trend across developed economies for these to go negative. Could you please do a video on the negative and positive effects of negative interest rates and what causes it?

[@damonhage7451]

Julian Schmahl There is no positives of the Fed manipulating interest rates. It is simply central planning of the most important price in the economy. Not good in any circumstances.

[@seanobrien7751]

@@damonhage7451 The Plain Bagel does a nice video on negative rates

[@seanobrien7751]

sorry my reply was to you Julian

[@JustinDuhaime]

Fascinating! Great work!

[@jem5691]

Great video! This should be re-watched every year as it's absolutely central to the story of stock investing. But I want to add one note about expectations of maximum drawdowns (peak to trough declines). I don't think we should take previous % loss figures as literal "worst-case scenarios". They are just a rough idea of potential % drawdown. Many of these historical datasets use coarse figures such as monthly numbers. If it were possible to see daily values (which we CAN'T see from past events) the % drawdown might actually be greater. Additionally, we are now in a faster moving, more real-time pricing market than ever before. Although I think it's very unlikely, I wouldn't be surprised to see a % drawdown in a bear market that exceeds 60% and I mention this because an investor should not get freaked out just because drawdown exceeds 50%.

[@yinyanz]

Great stuff Felix!

[@ZaziZazai]

Good content. Thank you

[@nk3582]

Thanks for another great video

[@defuwan4337]

This channel is the best finance one. No doubt.

[@kangre63]

Thanks again for another excellent video! You are the best anti-anxiety agent for these times. Your historic and fact-based information is extremely helpful.

[@staspmr]

Ben, I've never been more jealous of your hairstyle than I am right now when all the barbers are closed...

[@BenFelixCSI]

It’s not hard to replicate. I think it’s the optimal hairstyle. Nobody seems to want to do it though 🤷‍♂️

[@Stefbb]

@@BenFelixCSI I also think it's optimal. If you save the money and invest it, your hairstyle will make you having 30-40k more when retired.

[@MrPennstate2014]

@@BenFelixCSI I do exactly what you do, Ben. Genetics is a bitch, but it saves me from having to spend money at the barbershop.

[@johnkenney7217]

@@BenFelixCSI Here's another one on how to save lots of money over a lifetime: Razor blades mainly do not wear out through friction, but rather oxidation of the micro-edge. If you blot the blades on a towel after shaving, which takes literally less than 2 seconds, the blades last at least 3 times as long.

[@pran10000]

Holy smokes. This blew my mind. Thanks

[@SantatanDharmaGyan]

very informative..

[@shaharlevytaiji]

Educational and rational as always. Thanks

[@daverichardhadley]

just watched The Queen's speech talk about the value of self-discipline and resolve in her subjects. KZbin's algorithm recommended that I follow it up with Ben Felix talking about the value of self-discipline, resolve and value in investing.

[@prayunceasingly2029]

@Celtic Revival / Adfywiad Celtaidd Good point!

[@prayunceasingly2029]

@Celtic Revival / Adfywiad Celtaidd I bet the queen needed self discipline during Charles's scandals as well as her grandson's mishaps though.

[@paulf1113]

@Celtic Revival / Adfywiad Celtaidd Outside of all other debates about the aesthetics or desirability of a monarchy, they do generate far, far more revenue for the public purse than they take.

[@moeedahmed9088]

Excellent analysis & facts presentation.

[@stright9607]

This is incredible

[@matthiaswitt1063]

Simply. Ben's the best.

[@artifaxiom]

This is such an exceptional video that I'm sure will have many periods of relevance. I love the rigor and data-driven approach of it. Very convincing!

[@BenFelixCSI]

Thanks!

[@rtashpulatov]

very informative, as usual. Felix, what are your thoughts about buying protective puts during the market downturns?

[@JackyTMusic]

Great content, damn

[@jooky87]

Excellent summary of the history of bear markets

[@marc8352]

Hey, thanks for the vids! Can you do one on the Value Line’s Median Appreciation Potential (VLMAP) as a market timing model?

[@OmanHaithamOman]

Very informative

[@brunomaluf7588]

This is the best video ever!!

[@irenepaz6233]

I just found this video, Thanks for explaining this facts in an honest and uncomplicated way.

[@arnabsinha7341]

Impressive presentation backed by hard data

[@PapaCharlie9]

The out performance of Japanese value stocks and the reinforcement of the importance of diversification is a fantastic rejoinder to the "Japan is the future of every equity market" meme. I learn something new with every video in this channel.

[@jc74435]

Best video you've done so far. Thank you. As an european investor, what's your opinion about the Vanguard FTSE All World ETF (VWCE)? Is it sufficiently diversified? I find it hard to get exposure to small cap value ETFs here in the EU.

[@indreurbonaite5886]

FTSE Global All Cap incluces small cap, might want to look into it!

[@aliciaerby3862]

You’re the best Ben

[@kungpowlo]

You and Adam Khoo are a God send. Unbiased information coming from experienced individuals.

[@bigphil303]

Great Video...

[@jugzster]

Ben keeping things in perspective, complete with historical data. Thankfully our situation now isn’t as dire as the 1930s

[@spindillio]

Really great content as usual. Any thoughts on Ray Dalio’s All Weather Portfolio or Chris Coles long/short volatility portfolio?

[@Mr.dr.brotherman]

Yes yes yes. Sober, informed and well produced.

[@rafael123loek]

Very good, objective video.

[@helshabini]

Thank you for this video. I was stunned by the knowledge of past times to recover. It puts into perspective how essential it is to have patience with stock investments.

[@Sousou30988]

Ya sidi :D

[@mircoc2357]

Hi Ben. I want to tank you for your contribution, which I think is really amazing ! Thanks to your video finally I have cleared some doubts I have while investing. Your videos represent a substial contribution to the averege people in terms of choise to make in the process of investing. I want to thank you again and I am looking forward to see your next video. Keep up with the great work you are doing !! I really think your channel should reach at least 2 or 3 mln subscribers at least !!!! from Italy, Ciao !

[@BenFelixCSI]

Thank you!

[@MiJAuMEW]

Hej Ben! I discovered your channel today and I'm blown away! You are great! I understand that people who own index founds should hold on and not sell. But what would you suggest for someone, who would like to enter the market now? To wait until the dip reaches the bottom (which is impossible to recognize, I know)? Would bonds/stock ratio be any different in the time of crisis or at the point when markets are beginning to pick up? Which ETFs would you suggest to someone from Europe? Your advice would be greatly appreciated!

[@londonoalex]

Hey dude thank you for such an informative video. I'm wondering where we're able to get historical data like the one you used in yourVideo. When I go to a stock market website, the furthest back I could go is 10 years

[@PapaCharlie9]

Every video on this channel is great, but this one stands out for timeliness and interest for an audience beyond this channel. So many people who haven't lived through and don't know this history of bear markets truly think it's the end of the investment world forever. I hope there will be a blog post that goes with that, so I can share both.

[@istvanmeszaros4112]

I love how you say: This can't make this stuff up :D ... very convincing Thank you for the video.

[@michaeldo1988]

Sensible advice everytime