Nikkei bear

Japan's Nikkei 225 Average is an index of the Japanese stock market similar to the Dow Jones Industrial Average or the S&P 500 Index. Japan's stock market had an extended multi-year rally that started in earnest in the 70's and accelerated sharply in the 80's. The Nikkei peaked on December 29,1989 at 38,915. The devastating bear market that ensued dropped the average by 63.5% to 14,194 by August, 1992. The Nikkei has recently had another major downdraft and is currently at at approximately 16,000.

We didn't put these graphs and examples in here to scare you or make you avoid the stock market. The stock market is the place to be invested for the long run. Over long periods of time the stock market has had far greater returns than any other investment class.

But if you are invested or considering investing in the stock market you need to be prepared for bear markets. They will happen. And they will reduce the value of your holdings substantially. If you are a dedicated buy and hold investor, you must consider these bear markets. Will your steadfast resolve hold in the face of a 30% decline? How about a larger decline? If not, then you need to reconsider the buy and hold philosophy.

Copyright © 1997-2005 Jeff Walker. All rights reserved. Information in this document is subject to change without notice.

Copyright © 1997-2005 Jeff Walker. All rights reserved.
Information in this document is subject to change without notice.