Bear Markets and Winter Colds: 11 Ways They Align

2. The Denial

Stock market: This is only temporary. The market is taking a pause.

The cold: I can fight this off. From now on, I will wear my coat when I go out.

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3. The Proof

Stock market: Peak to trough, the decline reaches 20%. This is the confirmation we are in a bear market.

The cold: It’s official. You develop at least one symptom. It might be a sore throat, cough or runny nose.

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4. Gaining Momentum

Stock market: The declines get steeper. There are few up days, many more down days.

The cold: You develop more symptoms. You are stuck in bed.

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5. The False Recovery

Stock market: There is a bear market rally. Stocks move up 5% to 10%. You think the worst is over. You have ridden it out. You are pleased with yourself.

The cold: Suddenly, you feel better. The symptoms lessen. You are convinced you have recovered. You go out to a bar and have a drink to celebrate. You are back in bed the next day.

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6. You Watch Too Much TV

Stock market: You watch the financial news channels. They interview someone who says this is the moment a worldwide depression is beginning.

The cold: You watch the news channels. Someone talks about a new strain of virus that is popping up. You notice that the symptoms are similar to yours: low-grade fever, aches and pains and feeling tired. You worry that it’s not a cold. It’s this new something.

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7. You Lose Patience

Stock market: Why is the stock market not recovering? Hasn’t it been down long enough? You think about those news stories. “This time it’s different.”

The cold: You are resting in bed. One symptom departs and another takes its place. Day after day, you are not feeling better.

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8. Let's Ignore All Rational Advice

Stock market: You think that the stock market might not be the place to be anymore. You think that other investors have moved on. You hear ads about experts who predicted this decline, and they seem to recommend outlandish, alternative investments. You give this serious consideration.

The cold: It isn’t going away, so why not try something else? You go online for inspiration. Some people promise instant, miraculous results. Where are you going to find eye of newt? Why is it so expensive? Why is this website domiciled offshore?

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9. You Begin to Give Up

Stock market: You decide that this is the new normal. The days of stocks advancing year after year in the long term are over. You lose interest in investing.

The cold: You decide that this cough is your new reality. You are never going to get over it. You might as well get used to it.

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10. A New Day Dawns

Stock market: Suddenly, the stock market rallies. What might have been thought to be a bear market rally actually signals the beginning of a bull market.

The cold: All the symptoms disappear. Even the lingering ones eventually go away. The tissues and cough medicine you have been using daily go untouched for a week. You have recovered from your cold.

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11. The Short Memory

Stock market: You forget all about the market decline. You rationalize it wasn’t as bad as you feared. You cannot understand why you sold some stocks at the bottom. Wasn’t it obvious the market would eventually recover? You almost tell yourself it never happened.

The cold: You forget you ever had a cold. Looking back, the time you were ill seems much shorter. You cannot understand what all the fuss was about. It was only a cold, wasn’t it? People get them all the time. It’s a bad memory, so you minimize or forget it.

Whether it’s a cold or a bear market, we tend not to learn from the past. What was it that George Santayana said? “Those who don’t learn history are doomed to repeat it?” He actually said: “Those who cannot remember the past are condemned to repeat it.”

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