The Tedious Middle

“We now enter the most challenging part of the bear market: The tedious middle. — Dave Rosenberg”

A Moment of Perspective

Over the past three months, the S&P 500 experienced broad declines of -16.5%, and the index is down -20.6% since the start of the year. Thirteen of the fourteen sub-industries in the S&P have seen negative returns over this time period, with the only exception being the energy sector which has been buoyed by higher gas prices. In particular, the first half of 2022 has been humbling for many tech companies, with the Nasdaq Composite losing almost a third of its value and many individual tech stocks have tumbled 50% or more. These declines have been in direct response to rapidly rising interest rates and a Fed that has vocally shifted its focus toward fighting inflation after years of indirectly supporting market prices via low interest rates. Lastly, the broad US bond market, normally a source of stability in investment portfolios, saw a decline of -4.6% during the quarter, and -10.2% since January, in response to the Fed’s telegraphed plan for higher rates and ending their monthly bond purchase program.

The Belly of the Bear

Economist, Dave Rosenberg, recently quipped that “We now enter the most challenging part of the bear market: The tedious middle.” This portion of the market cycle is challenging because prices have already declined and investors are beginning to hear the siren calls of market timing, compounded by pundits with loud predictions about what comes next.

Opportunities Amidst the Noise

The counterintuitive part about the current stage of a bear market is that there is actually less risk for investors. Broad market indices are trading at lower prices, meaning investors can buy shares of high-quality businesses that are currently on sale during a temporary period of fear.



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North Berkeley Wealth Management

North Berkeley Wealth Management


A values-driven wealth management firm helping clients create a sense of calm in their financial lives through responsible investment and thoughtful planning.