Post #1764 by zeelotes on the Mechanical Investing board

Investment Strategies / Mechanical Investing

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Jim wrote: I don't really try to dodge bear markets as such.

Just to be clear, I don't either. I try to capitalize on them. Dodging them by definition means going 100% to cash.

Let me illustrate from an article I write to start every year. This was released on 1/1/2022. It concerns the historical cases when inflation has reached six percent.

6.00%   Date        Date        S&P 500    S&P 500             S&P 500     S&P 500
Months  Begins      Ends        Max Price  Min Price  % Drop   Peak Date   Trough Date
4       4/30/1902   8/30/1902   $8.85      $6.26      -29.27%  9/30/1902   10/31/1903
6       10/31/1902  4/30/1903   $8.85      $6.26      -29.27%  9/30/1902   10/31/1903
1       2/28/1907   3/31/1907   $10.03     $7.45      -25.72%  9/30/1906   9/30/1907
6       5/31/1907   11/30/1907  $9.93      $6.25      -37.06%  11/30/1906  11/30/1907
14      4/30/1909   6/30/1910   $10.23     $8.64      -15.54%  10/31/1909  7/31/1910
12      4/30/1912   4/15/1913   $9.86      $8.12      -17.65%  9/30/1912   6/30/1913
2       4/15/1916   6/15/1916   $10.21     $6.80      -33.40%  11/30/1916  12/31/1917
55      7/15/1916   1/15/1921   $10.21     $6.27      -38.58%  11/30/1916  6/22/1921
24      9/15/1941   9/15/1943   $10.47     $7.47      -28.65%  7/28/1941   4/28/1942
28      8/15/1946   12/15/1948  $19.25     $13.55     -29.61%  5/29/1946   6/13/1949
12      2/15/1951   2/15/1952   $22.81     $20.96     -8.11%   5/3/1951    6/29/1951
3       1/15/1970   4/15/1970   $99.23     $68.61     -30.86%  11/10/1969  5/26/1970
3       5/15/1970   8/15/1970   $97.36     $68.61     -29.53%  11/17/1969  5/26/1970
34      9/15/1973   7/15/1976   $115.47    $60.96     -47.21%  3/15/1973   10/4/1974
66      4/15/1977   9/15/1982   $107.97    $86.45     -19.93%  1/3/1977    3/1/1978
4       10/15/1990  2/15/1991   $369.78    $294.51    -20.36%  7/16/1990   10/11/1990
14      11/10/2021  12/31/2022  $4,818.62  $3,491.58  -27.54%  1/4/2022    10/13/2022
17      Average     1900-2020                         -27.55%

The average drop from 1900 to 2020 has been -27.55% in the S&P 500. The drop from the high in November of 2021 to the low in 2022 was -27.55%. It is pretty rare for a repeat to occur at this level of closeness, but it does happen. It makes no sense to me to know this information and then ignore it! Why do that?

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