Bear Market Has Entered its Final Stage？Take Chances Please

Do your know the Five stages of Grief of bear market?

As of market close on Thursday，$S&P 500(.SPX)$ ,$NASDAQ(.IXIC)$ , $DJIA(.DJI)$ 's YTD are -18.66%, -27.04%, -15.37% respectively.

The market are digest the probabilty of FED's rate hike in 100bps, although the consensus of forcast still at 75bps rise in September 21st.

Citi's U.S. economist's base rorcast is a 75 bps hike, but he noted 100 bps is also a possibility.

Bank of America U.S. economist also expect a 75bps rate hike this month. He also predicted that the updated forecast would point to an increased risk of a hard landing.

The talk of a hawk-to-dove Fed policy has also died down, and Wall Street strategists also believe the bear market will be more difficult to defuse.

Tech stocks fell sharply on Thursday, led by technology stocks, and some traders believes that the bear market has entered its final stage.

Cited from one Hedge Fund Trader i've know, He said, often the end of a bear market is a continuous heavy-volume slump of the giants stocks. On Thursday, $Direxion Daily Technology Bull 3X Shares(TECL)$ led the decline. This scene is actually relatively rare for many months, it is almost the last round of wave of every long bear trend.

Institutions always want cheaper chips, and depressed sentiment is a mirror image of the middle (bottom) of big swings. When everyone in the market bet the bear of market, which has been last for many months, such as now, then the coming bottom will be the starting point of a big round of gains.

According to this veteran trader friend, is the current bear market really in its final stages?

The market psychology of bear markets generally follows a five stages similar to what psychologists call grief - denial, anger, bargaining, frustration, and acceptance--by Elisabeth Kubler-Ross in her 1969 model for coping with terminal illness.

Here's how they fare in the stock market:

• Denial: At this initial stage, the prevailing view is that stock market weakness is nothing more than a buying opportunity. Far from being angry (see next phase), investors are rather optimistic, as the market correction provides an opportunity to buy stocks at a cheaper price than if the bull market continued.
• Anger: Denial is getting harder to sustain as the market correction becomes too severe. Investor sentiment eventually turned into anger, who complained about the unfairness of the pullback. A hallmark of this stage is when investors view pullbacks as a personal insult -- as if the market cares if you or I lose money.
• Bargaining: At this stage, investors redirect their energies to figuring out if they can maintain their lifestyle while their portfolios take a hit; retirees recalibrate their financial plans. Investors promise to forgo luxury cars or European vacations -- the fat in their budgets -- as long as they don't need to cut spending.
• Depression: As the market continues to slide, people realize that spending cuts aren't enough. There will be major changes in lifestyle. Close to retirees working longer than originally planned; retirees returning to work.
• Acceptance: In the final stage, investors throw in the towel. They surrendered to the bear market and stopped even imagining when it would end. They see any sign of a stronger market as a "fool's rally," enticing the gullible to lose more money on the next dip.

According to the above five psychology, how do you feel?

Macroscopically, under the macro factors of the Fed raising interest rates, the strong global harvest of the US dollar, the geopolitical crisis, the energy crisis, and the repeated epidemics dragging down the economy, the pessimism in the stock market does not seem to have dissipated.

However,Winston Churchill was working to form the United Nations after WWII, he famously said, “Never let a good crisis go to waste”.

Investor Warren Buffett once said that I was born in a bear market. Know that Buffett's performance in a bear market can be described as perfect.

During the first oil crisis in 1973, the S&P 500 index fell 13%, and Buffett achieved a positive return of 5%; in 1974, the S&P 500 continued to fall by 20%, while Buffett achieved a positive return of 6%; During the second oil crisis, the S&P 500 index fell 8%, and Buffett achieved 32% performance; in 1981, Paul Volcker took "shock therapy" to suppress inflation, raising interest rates rapidly by nearly 10%, the S&P 500 fell 7%, Buffett The yield was 31.8%, outperforming the broader market by 38.8%.

Before and after the financial crisis in 2008, Buffett increased his assets in industries such as industry, energy, health care, and optional consumption. It was also at this opportunity that Buffett made further adjustments and improvements to the degree of diversification and anti-risk capabilities of the portfolio.

There are actually ways for investors to make money in a falling market: for example, buying put options, or buying bearish ETFs, etc.

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