What Could Signal a Big Bear Market?

Transcript

Ken Fisher:

So whenever the market drops like it has in the early part of 2025, into correction territory, it's intuitively natural that people worry about is it going to—is that the precursor? Is it going to lead into big bear market? And of course, sometimes you get a big bear market and more times than not you don't. Correction traditionally defined as a drop in broad market like the S&P 500, or the world market like the Morgan Stanley World or Morgan Stanley ACWI.  Correction defined as dropping more than 10%, but not beyond 20%, and a bear market is defined as something more than 20% and requires some duration, although generally anytime it drops more than 20%, it's cataloged to the bear market.

I just want to say sometimes it becomes a distinction without a significance in that there isn't intuitively, as you would know, not a marked difference between a market that's down 19%, which would be categorized as a large correction and market that's down 21%. That would be categorized as a small bear market. The 2% difference is something that wiggled during a day or two. But the reality is, if you think of a significant bear market that takes more time, it's a bigger magnitude drop. It's scarier. It brings bigger fears. It usually, but not always, is associated with recession that lags the stock market. And so it's a valid question. It's a valid fear. The reality of what I have thought from the beginning of the year is that this is a bull market year. I still think it's a bull market year. I think we've been in a correction. I might be wrong.

I've assessed everything that the administration has done on tariffs as backwards, ignorant, not understanding the way global trade works. Not understanding what the word trade deficit actually means. Thinking that the trade deficit is bad. Thinking that tariffs will generate significant revenue for the government. All of this is just stupid stuff and it's ignorant. It's wrong. That's a whole different topic. But if the administration keeps wiggling the way that we're been wiggling and keeps doing stupid stuff in these regards, yeah, we probably get bear market and recession. Am I predicting that now? No, I don't think that'll happen. But it might.

And the way to assess that is over the course of this so-called 90 day pause that President Trump has said that we're in, where he doesn't apply his reciprocal tariffs, while he tries to negotiate trade deals and see what happens with that. And then what he does with tariffs afterwards or not, to determine if he makes the tariff terror that he's given the world go away. And let's hope that he does. Because tariffs are always bad. They never accomplish the goal that the imposers of them think they will, and that many in America hope they will create for America. Tariffs are always bad for the imposing country. So we have to monitor that. Looking forward I'll be probably speaking on this every month in videos and I hope you tune back. I'll probably have some more videos this month on this topic. Thank you.

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