The Bell That Never Rings

June 19, 2023

There’s an old saying that no one rings a bell at the bottom of a bear market. I certainly didn’t hear a bell ring on October 12, 2022. It was a Wednesday roughly eight months ago. I ran a google news search for “stock market” on that otherwise boring Wednesday in October. Here is a sampling of the headlines on the first page:

“Earnings Will be Bad. It Could be Even Worse for the Stock Market” – Barron’s[i]

“The Stock Market’s ‘Nightmare’ Chart is Already a Reality” – Yahoo Finance[ii]

“Stock Market Today: Dow Slips on Inflation Data, Fed Minutes Show Concerns Over High Inflation” - WSJ[iii]

But it turns out October 12 was the bottom of the bear market that began in January of 2022. No one knew it then. No one rang a bell. All the headlines were still bleak. I remember people’s moods. Bleak. The mid-term elections were around the corner. Everyone was worried about how the election would impact the stock market. It was the one thing the Dems, the GOP, and independents agreed on.

The market began its decline 10 months earlier on January 3rd. After a massive runup in 2020 and 2021, the S&P 500 lost 25% by October 12, 2022.[iv] Percentages are helpful reference points, but investors think in dollar terms. A $500,000 portfolio at the close of 2021 was down to ~$375,000 just over nine months later.  A $1,000,000 portfolio was down all the way to ~$750,000. Not a good feeling. To the best of my memory, here are a few of the alarming topics rattling around investors’ psyche during the 2022 bear:

  • Supply chain crisis
  • Food/baby formula shortages
  • Inflation, inflation, inflation
  • Fastest rate hike in history
  • Russian invasion of Ukraine
  • More inflation
  • More rate hikes

And it’s not as though things suddenly got better on October 12th (see headlines from that day above). Here are a few of the frightening topics occupying the headlines since then:

  • FTX crypto blowup
  • Regional banking crisis - First Republic Bank, Silicon Valley Bank & Signature Bank – the 2nd, 3rd, and 4th largest bank failures ever within a span 1.5 months.[v]
  • Impending Chinese invasion of Taiwan
  • US Dollar losing its reserve status (haha)
  • Debt ceiling crisis – possible US default
  • More inflation
  • More rate hikes
  • War in Ukraine dragging on

That’s just off the top of my head. I’m sure there were plenty of other looming apocalypses of 2022 I’ve forgotten.

As the stock market tumbled, the exciting new investment was U.S. Treasuries. Government bonds. Seriously. Probably the most boring investment vehicle ever created. The equivalent of the I-formation making a comeback in football. But suddenly everyone wanted Treasuries. The stock market was down ~25% and the 2022 interest rate hiking cycle meant short-term treasuries were earning ~5%. A common refrain last year went something like this:

I’ll just earn 5% risk free in treasuries and wait for things to settle down.

“Things to settle down” was typically an amalgamation of the crises mentioned above – supply chains/inflation/rate hikes/Ukraine/mid-terms/regional banking crisis/dollar reserve status/debt ceiling/etc.

Once that’s all sorted out I’ll get back in the stock market. Until then, how great is 5% in treasuries?!

Meanwhile, the S&P 500 is quietly up ~20% from its October 2022 lows over the last eight months.[vi] Here is a very complicated mathematical proof:

20% > 5%

Ok, maybe it’s not that complicated.

This is the risk of seeking “safe” investments when the equity markets back up and scary headlines dominate the news cycle. Treasuries’ “risk-free” 5% return feels good at the exact moments investing in the stock market feels bad even though 20+% equity market drawdowns have always turned out to be excellent buying opportunities. “Buying low” sounds so easy in theory, but it’s a different ballgame when the headlines are blaring catastrophe about snarled supply chains, high inflation, historic pace of Fed hikes, a hot war in Europe, vitriolic mid-term elections, regional banks collapsing, the dollar losing reserve currency status (haha), impending US default, etc. So much easier and “risk-free” to clip a 5% annual yield in short-term treasuries.

To be clear, there were plenty of good reasons to buy Treasuries. If you had plans to use the funds in the next 2-3 years, there’s no reason to risk a large downturn in the stock market nor leave them earning 0.1% in a savings account. Short term treasuries or CDs or whatever other fixed income instrument earning 4-5% were great solutions. But for those with a longer time horizon seeking wealth creation, the opportunity to shovel funds into the 2022 bear market should have been a dream come true…

But the people who were buying low last year are quietly up ~20% since October and the people who bought short-term treasuries have earned ~2.5% since then. Another proof:

20% > 2.5%

Investing in the real world is different than in textbooks. The textbooks make all sorts of academic (and accurate!) points about historic opportunities to “buy low.” The bottom of the 1987 crash, the 2000 tech bubble, the 2008 financial crisis, and the 2020 COVID crash all look like generational buying opportunities in hindsight (because they were!). This is easily deduced from a book with hindsight as a companion. The difference is in the real world there are very scary reasons the market was slammed in 1987 and 2000 and 2008 and 2020 and 2022.* Those very scary reasons create very real fear among investors that textbooks can’t fully communicate. One way to describe a bear market is a manifestation of very realfear among investors for very scary reasons.

So we learned on June 8th of this year this bull is back.[vii] Up 20% from the recent low on October 12th of last year. But no one rang a bell in October. It was all fear back then. I don’t know how long this bull will persist. Perhaps it will begin a downward slide by the time this piece is published. Or perhaps it will never be down 20% from this point again.

But if you’re a long-term investor trying to make investment decisions based upon whether this bull sticks around…

Good luck.  

Sean Cawley, CFP®  

*and 1929 and 1930 and 1932 and 1933 and 1934 and 1937 and 1938 and 1939 and 1940 and 1946 and 1948 and 1957 and 1961 and 1966 and 1968 and 1973 and 1980.[viii] Ok that’s all the bear markets on record.


Neither asset allocation nor diversification guarantee against investment loss. All investments and investment strategies involve risk, including loss of principal.

Content here is for illustrative and educational purposes only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.

This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice. 




[iv] YCharts, SPX Fundamental Level Chart, 01/03/2022 – 10/12/2022.


[vi] YCharts, SPX Fundamental Total Return Chart, 10/12/2022 – 06/08/2023.


[viii] “Stock Market Historical Tables: Bull and Bear Markets.” Yardeni Research, Inc. October 28, 2022.