This bear market started off in an orderly fashion. Thanks to inflation, central banks hiked rates at speeds not seen in many decades and longer yields rose quickly from very low levels. As a result, markets came down as higher rates/yields beget lower valuation multiples.

When we say “orderly,” we are not downplaying the volatility or pain — we’re simply saying the market was being repriced. Even most investors were relatively apathetic to the declines. Whether that was because of some outsized gains in the previous year and a half, or recency bias that this bear would be similar to 2020 (i.e., down fast and back up, blink and you missed it), apathy has given way to emotions once again.

If you can characterize bear markets, moving from repricing or multiple contraction to more emotional-driven behaviour is a natural progression. As we see money flowing very quickly into cash proxies and product, the apathic patience of the first phase has given way to classic run-and-hide behaviour.

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