actually, let's jump straight to #5 !




(snip)"5. The Secular Bear Market: 1965 to 1980

During the 15-year span between 1965 and 1980 the S&P 500 returned roughly 27% or so, excluding dividends. That's 15 years of gains average out to a little less than 2% a year. tough going for the buy-and-hold investor. Meanwhile, throughout that period were frequent rallies of 20% or more, occurring on average about once every 18 months. That is why it's important to note the most recent extreme in the bullish percent indicators.

The NYSE Bullish Percent is now close to 20%, its lowest level since August 1998. After today it will likely fall below that level. For perspective, how unusual is this? How low can these bullish percents get?

The NYSE Bullish Percent, dating back to 1955, has reached the following low, extreme levels below 20% on just :

* October 1957: 8%
* May 1962: 6%
* September 1965: 8%
* July 1969: 10%
* September 1974: 8%
* April 1980: 14%
* October 1987: 6%
* September 1990: 18%

Below is a chart of the S&P 500 between 1965 and 1980 with the extremes of the NYSE Bullish Percent (above 80% - high risk; below 20% - low risk) overlaid. [ see chart at above link - sic ]

Note, bullish percents are not strict timing devices. Instead, they identify extremes in sentiment, but given the general upward drift in equities, buying stocks when the bullish percents are at low extremes has proved to be very successful over the long run.

The bottom line is that while we are still in the very early rounds of deflation for the economy, the stock market is fighting a bout of its own at a different pace, and at least for now, the initial rounds are probably over. There will be more drama to come, but we'll have to take those blows as they fall... perhaps literally."(snip)