Investing Advice

When a bear stock market may not be a bear market

The big losses of the biggest companies can swing the market indexes to look like the whole market is in trouble when actually the true story is quite different.

If the big company’s stock price is falling, then investors are losing a lot of money, because the bulk of investment dollars, about 80%, are tied up in these stocks, mostly through institutional investments and mutual funds.

Here is an example of what the market can really be doing:

In 2001, the Dow, the Nasdaq, and the S&P 500 were all down. But the average Nasdaq stock was up 15%. The average NYSE stock was up 7%. It was the large-cap companies whose stock was in trouble.
Market cap up/down%
Over $59 billion  -17.7%
$27-59      -5.9%
$16-27 -.7%
$11-16 +18.4%
$ 8-11 +3.4%
$ 6- 8 +9.8%
$ 5- 6 +31.1%
$ 3- 5 +22.6%
$ 2- 3 +21.1%
under $ 2 billion +13.8%

The large-cap companies that drive the index numbers up or down, were losing money. But the mid-cap companies did really well, and the S&P 400 mid-cap index that year reflected this.

Other Stock Market Basics Topics:

  1. Stock Market Investing – the Right Way
  2. More Stock Marketing Investing
  3. How to Pick Winning Stocks
  4. The Golden Rule of Investing
  5. Avoid Psychological Traps to Have Successful Investing
  6. Changes in Stock Values Can Be Big Numbers
  7. How to Invest Smart
  8. Stock Advice - Important Selling Rules
  9. Poor Stock Buying Decisions
  10. Market Indicators
  11. Stock Market Cycles
  12. When a bear stock market may not be a bear market
  13. Stock Index Futures
  14. Four Things that Affect Stock Valuation
  15. What is a P/E ratio?
  16. Value Investing
  17. Cheap Stocks
  18. What is a Financial Statement?
  19. Analyzing Financial Statements
  20. Stock Market Tip - Red Flags to Look For When Investing?
  21. The Annual Report – How to Read
  22. Stock Market Analysts – Stock Market Advice and Tips

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