Bear markets hurt emotionally — a lot. Ken Fisher calls the stock market The Great Humiliator (TGH). And TGH likes nothing more than scaring as many people out of as many dollars for as long as it can — before it goes up (or down). A bear market is TGH at its absolute deadliest.
Ken Fisher goes on to detail how the TGH robs people of returns any way it can. First, near term, an investor is down big. Huge unrealized losses. Utter humiliation, fear, and agony. Also, TGH knows people hate losses more than they love gains. Therefore, bear markets are so painful they make folks do crazy things that ultimately hurt them — for most of them, as Ken Fisher points out, much worse in the long term than if they simply sat on their hands. Things like capitulation-selling at the absolute low. Far too many investors, on their own, do this to their heavy detriment — often in the name of "waiting for clarity." Or, in the depths of bear market agony Ken Fisher goes on to explain, many investors suddenly decide they can't handle big stock volatility anymore (or whatever the myriad other reasons) and change their long-term strategy to hold a bunch of cash and bonds, right in time to miss the huge stock market bounce off the bottom. (Read more in Bunk 9)
Discover more details of BUNK 8 in Ken Fisher's Debunkery.