Ask Colin

What phase of the bear market or business cycle are we in? (Early March 2001)

The stock market tends to be a leading indicator for the business cycle. So the answer to both is always different in timing. The bear market is the US has started. This is plain on the Nasdaq and S&P500 indexes, but not yet on the Dow Jones Industrial Average, which I always expected would turn down last, as the leaders usually do. I think we are in phase 1 and maybe just coming into phase 2. I do not expect an early end to the bear market, because long bull markets tend to lead to long bear markets. How long? Who knows, it depends on many things.

Australia will probably follow the US, but I expect it to be qualitatively different - the bull market has not had the same excesses, so the bear market may be milder/shorter.