The bearish correction

“Is this a slip a correction or the beginning of a bear phase?” The question seems at once so familiar and confusing that I wonder if it is really possible to exactly differentiate between the two. At what levels the markets can be said to be correcting and beneath which they are bearish is a statistical figure. I mean, call it a bear phase, or a long correction, isn’t the end result just the same? Going by the popular definition a bear phase is for a longer period whereas a correction is relatively short-lived. But even then, assuming that the length of corrective spell depends on the length of the preceding bull run, don’t the two boil down to pretty much the same thing?

Ofcourse, it is natural that we would want to know how long our money is likely to remain blocked. I am afraid the only way to guard against such contingencies is to periodically book our profits, at least partially. The best way to time the market is to not time it at all. We must book the profits as soon as we are in a position to realize our own estimates of return and also maintain a buffer to enable us to return the market later on at lower levels.

But technical jargons apart, coming back to where I started, why is there such a lot of panic when people hear the word “bear”? And in what way is a “correction” however long it is, such a big relief? The fixation I believe is in our minds. The word correction, without a doubt instills some hope, as if the market would correct to its proper (fundamental) values thus making us more optimistic of the future. And there is a fear lurking in our minds of the BIG BAD BEAR as we associate a long bear phase with THE GREAT DEPRESSION that is yet to come!