>Looking at Yahoo's chart of the Dow from what looks like 1929 onwards (the
>axes aren't particularly well labelled), it seems that bear markets are
>rather rare things. There is a pronounced one in the mid-1970s, but
>otherwise, the graph shows either an upward trend or flat.
>
>Since flat means no growth in value of investment (and since your book
>suggests that making money by beating the market is rather hard), does a
>flat market equal a bear market (since inflation is eating away at your
>money)?
>
>And following from that, does that mean that if your purchases are not
>backed by debt, you can just ride out a bear market?
Market pundits often see a long period of flatness in the major averages (as a proxy for blue-chip stocks), accompanied by deterioration in less visible averages (as a proxy for the lesser chips) and a collapse in speculative leadership, as the death signs of a bull market. Efficient market partisans would dismiss this all as folk wisdom of no scientific standing.
For most of the 1970s and early 1980s, U.S. stocks were pretty much flat in nominal terms, so the real deterioration was pretty sharp. But the 1973-75 period saw a deep bear market, with the S&P 500 losing 43% in nominal terms. We haven't had anything like that since - which is very unusual, since savage bear markets are pretty normal occurrences, even within the overall long uptrend.
Doug