Everybody has heard of the 5 stages one goes through when faced with anything from an annoying change in one's routine to a devastating loss: denial, anger, bargaining, depression and acceptance. Now would be a good time to remember these so-called stages of grief and apply them to the stock market, especially for those (analysts, bloggers and mere observers) who are already calling the end of this bear market. Which brings me to Bill Fleckenstein's latest Contrarian Chronicles where he writes:
Justin Mamis of The Mamis Letter recently noted that bear markets typically involve three legs: denial, realization and give-up. It's his view that we may have experienced the first leg but that the second one is yet to come. This realization leg occurs when people comprehend why the market is going down and sell stocks in response. As he points out: "A bear market can't end -- never has -- until denial turns into realization. . . . This is a long process, because the light bulb doesn't come on collectively but gradually. Some are quicker to catch on, or less dumb, than others."As to the give-up leg, Mamis characterizes it as the culminating phase. So, given that we may have seen only the first leg, his eyes and his words are telling him that the process has a long way to go and stocks have a long way to fall.
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