It’s official. The bear won the fight for the market and, with his paw, knocked cryptocurrencies from banks. It is called “bear market”, or “bear market”, the moment in which the pessimism of the market and the downward trend of securities traded on the Stock Exchange become clear.
The main seal of a “bear market” is the drop of more than 20% in broad indices, that is, those that bring together securities from different sectors to give an overall picture of the market (such as the Ibovespa).
And it was on the 13th that the S&P 500, an index that gathers the 500 largest companies with shares traded on the New York Stock Exchange and Nasdaq, managed to achieve the feat of registering a score more than 20% below its top, reached at the turn of the year.
Our Ibovespa plunged below 100,000 points last Friday (17), which has dropped by almost 18% since April 1st and by more than 23% since its peak in June 2021.
The crucial point in understanding this type of period is that, while it lasts, even stocks of companies that report good results, big news and great prospects can continue to fall, because the so-called “market sentiment” is pessimistic.
The good news is that bear markets are often short-lived. Much shorter than the “bull markets”, optimistic periods, when prices rise.
A survey by the American manager First Trust, which analyzed the behavior of the S&P 500 from 1942 to 2022, shows that the average duration of a “bear market” is 11.3 months, with an accumulated loss of, on average, 32.1% . Bull markets, on the other hand, usually last 4.4 years, with accumulated gains of 154.9%.
For those who invest thinking about the long term, the bear can bring good gifts, such as cheaper shares of reliable and prosperous companies, but cause anxiety to investors, even the most experienced, as they see the price of their shares melt day after day.
As governments seek to reduce inflation by raising interest rates, it is even part of the plan to rein in the economy. And that goes through putting water in investors’ beer.
As the explanation is harsh, boring and too logical, candidates for the election and for the presidential re-election decided that the culprit this time is Petrobras.
Jair Bolsonaro’s irritable outbursts against the oil company are dominating the news and generating even more insecurity among investors regarding government interference in the company, which brings down the share price.
At the same time that it condemns its profits, talks about the company’s social function and blames its administration for the rise in fuel prices, the federal government is making an effort to put Petrobras in the privatization plan. The rhetorical effort to defend social function and privatization at the same time is impressive.
Last Friday, Bolsonaro even proposed a Parliamentary Commission of Inquiry (CPI) to investigate Petrobras directors.
Transparency never hurts. It is worth remembering that the last major investigation into Petrobras began about eight years ago and earned the nickname “Lava Jato” operation.
One of the consequences of the operation was the arrest of Luiz Inácio Lula da Silva, who is now seeking to return to the presidency.
In his draft government program, which was made public on the last 6, the PT candidate says that the oil company “will once again be placed at the service of the Brazilian people and not of large foreign shareholders.”
So, in the midst of a worrying scenario, which could drive away even more foreign investment from Brazil, the two main candidates for the presidency feed the fantasy that the biggest company in the country (in revenue) is a Geni, made to beat, good to spit on. and that they could save everyone, just by accepting what “the mayor, on his knees, the bishop, with red eyes, and the banker, with a million” ask of him.
Investors who believe that there are simple solutions to complex problems tend to end their days in the red, for not protecting themselves from the numerous market variables.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
