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What A Real Bear Market Looks Like
This is Porter’s Daily Journal, a free e-letter from Porter & Co. that provides unfiltered insights on markets, the economy, and life to help readers become better investors. It includes weekday editions and two weekend editions… and is free to all subscribers.
The bond market collapsed in the late 1970s… Marty Fridson reflects on 21% interest rates and a 27% drop in bond prices… There are always gems to be found when there is lots of distress… The latest episode of the Black Label Podcast drops today… |
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U.S. stocks last week were down 10% from recent highs – which is defined as a correction – erasing around $5 trillion in market value. That’s not pocket change…
And that’s only half way to a bear market (down 20%)… and even that is just for starters.
So to remind us what a real bear market feels like… we asked Marty Fridson, the lead analyst for Porter & Co.’s Distressed Investing, to help us out. Marty is a pioneer of the entire asset class of bonds. Marty has seen it all… Investor’s Digest called him “the most well-known figure in the high-yield world.” Over a 25-year span with Wall Street firms including Salomon Brothers, Morgan Stanley, and Merrill Lynch, he became known for his innovative work in credit analysis and investment strategy. Marty joined Porter & Co. in March 2023. Since then he’s made 17 distressed-bond recommendations, which are up 16%… and eight distressed equity recommendations that are up an average of 31%.
Below, Marty describes the brutal bond bear market of 1978-1982, when super-high interest rates caused yields to soar and prices to plummet.
Here’s Marty…