How to avoid the next bear market

By Mebane Faber
Investors are reeling from recent stock market losses and trying to understand what went wrong. Not only did the S&P 500 index (SPX) decline 36.77 percent in 2008, but the normal benefits of diversification disappeared as many traditionally non-correlated markets moved in lockstep to the downside. Commodities, real estate investment trusts (REITs), and foreign stock indices all lost more than 35 percent last year.

Review of even the simplistic long-term timing techniques indicates the potential to avoid the market’s darkest periods.



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