A Rather Disappointing Bear Market Rally So Far

Last time we discussed having to make decisions between this or that. In the end, one of the things we decided: We're in a Bear Market in stocks.

That means recent positive surges in stocks, instead of marking a bottom of a correction in an ongoing bull - as a number of financial media folks asserted - we were simply in a Bear Market rally. 

So far, so good.

But if this was a Bear Market rally, it's proven to be rather disappointing one, don't you think? Bear Market rallies, while not always of the same cloth, typically explode and suck in investors who believe that a correction has ended and it's time to pick up bargains. There were some pops; but we'd be hard pressed to find an explosion.

And Friday's action, coming on the tail of the inflation report released early in the day, must have shaken the Bull Market hangers-on. Disappointing. Will they begin to question the Bull thesis?

On the other hand, what of those who have voted Bear Market? Some of these are late-comers to the party. As a result they had not sold down their stock positions when the first-in crowd did. So they perhaps salivated as a rally seemed to launch: Great! We can sell into strength and shed what should have been shed already. Thank you Mr. Market for this opportunity.

As the actual rally turned wobbly, sweat must have beaded up on their foreheads. They were waiting for a bigger bang for their buck. Did they wind up selling as the rally, rather than ripping their faces off, just flaccidly meandered up a bit, but not much? Did they hold on waiting for a stronger rally only to be slapped upside the head on Friday?

It's not been easy for anyone, has it? I think not.

Here we are with what we thought was a reasonably balanced portfolio taking dings, first more, then less, then more again. Little pinpricks add up.

Then again, a true Bear Market affords little opportunity for profit - if any. (With the possible exception of masters of shorting, not our bailiwick.) So maybe we should be grateful for the pinpricks. The result so far has been far smaller losses than the classic 60/40 balance. But we really did think some of our other asset classes would have done us better. 

OK, so the commodities have held up reasonably well. But our bonds have been a major disappointment - to put it mildly. More than disappointing, though, they've been puzzling. Shouldn't they have responded positively on Friday? They didn't. Where did all the money go that flowed out of stocks, if not to treasuries?

And before you say Gold, and/or the precious metals universe (including the mining shares), let's pause a moment. Sure they took in money. But it was far from overwhelming. And these have been in a correction in their ongoing Bull Market (if you believe that's what they've been in) so any upward thrust comes from a beaten-down base. Ah, I suppose we should just be grateful for what's been given and not get greedy.

Maybe losing less - ideally little would be best - really will be an acceptable fate. At least until the coming crisis really unfolds, if one does. In that case, well, we'll leave that for another time. Not that it doesn't occupy our attention much of the time.

Conclusion simply this: Yes, it has been a rather disappointing Bear Market rally so far.