Good morning,
There’s nothing more seductive than a bear market rally.
Okay, that might seem a bit dramatic for a market that has only declined 9.8% from top to bottom, but I think the logic still applies.
The market has been steadily falling for two months, and last week we got our first real rally, with the best day for the S&P 500 (+2.9%) since last May.
Perhaps even more so for financial advisors, who are conditioned and trained in the ways and (very real) benefits of dollar-cost averaging, staying the course, etc., rallies in a downtrend can be hard to resist. If you’re a tactical investor, you don’t want to miss a great buying opportunity.
But the fact is, there is one key that almost always separates bear market rallies from real durable rallies after the low is in:
