Every bear market has its end, after about 8 months on average

The Ticker

September 18, 1998|By Julius Westheimer

TROUBLE AHEAD? Many people ask, "How long do bear markets generally last?" The average bear -- sharply down -- market from 1953 through 1997 lasted eight months and it was 13 months before the previous high was regained. The average decline was 24 percent.

The worst bear market, 1973-1974, was down 48 percent. It required five years and four months to reach its previous high, according to data from David L. Babson & Co.

SILVER LINING: Speaking of bear markets, are you worried about your stocks? "Since 1928," says U.S. News & World Report, Sept. 14, "there has never been a single 20-year period when the stock market has failed to provide a positive return."

WHAT TO BUY: Should you buy the new, inflation-indexed Treasury bonds? Income Digest says, "Investors should take advantage of high inflation-adjusted rates by buying inflation-indexed securities. These are backed by the U.S. government and the principal is indexed to the consumer price index."

The latest Kiplinger Washington Letter advises, "Don't go overboard if you're buying stocks. Stocks will be depressed by further gloomy overseas news and troubles in our own economy."

SURPRISE? If you retire from a $40,000-a-year job and don't want to "spend your growth" in retirement, you will need about $800,000 in assets to equal your earned income. Why so much? The average stock has returned about 10.5 percent a year over 70 years. Half of that came from growth, half from income.

CAREER CORNER: Thinking of switching jobs? If so, are you worried about your retirement money? "If you change jobs and your new employer has a 401(k) or other retirement plan -- and allows you to roll your old balance into it -- such a rollover has many advantages," says Tax Hotline. "The rollover maintains tax deferral, appeals to people reluctant to manage their investments, and your money is protected from creditors."

Pub Date: 9/18/98

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