A lot of stock market experts are concerned that the market is overheated and ripe for a new bear market.
One of those expecting a bear market is Shawn Williams of Motley Fool, in a May 8, 2021, post, “A case is mounting for a big drop in the stock market.” The article cites statistics that in the previous eight bear markets before last year’s pandemic crash, the market has suffered at least one double-digit correction within three years of the bear-market bottom.
I can’t say this statistic leaves me terribly frightened. The bottom of the last bear market was March 23, 2020. A 12.5% chance that we have a pullback of over 10% (meaning an 87.5% chance of a pullback of under 10%) probably is more encouraging to actually invest in the market rather than pull out.
The article does give a statistic that is more concerning, …