Is The Bear Market Over?

Stocks are rallying.

On November 10th, the market had its best day in over two years. With the Dow Jones rising 3.70%, the S&P 500 soaring 5.54%, and the Nasdaq skyrocketing 7.35%.

A massive surge of green during an otherwise lackluster year.

But, before you break out the champagne, I want to explain why the bear market isn’t over. And how stocks could continue to sink for the next few months.

Here we go…

Why Stocks Could Go Lower

Interest rates.

That’s the short answer.

To expand on this, higher interest rates make it harder for people, and companies, to make money.

When you can borrow funds at 1, 2, or 3% per year, it’s virtually impossible to not turn a profit. Low interest rates made it easy for amateur real estate investors to lever up. And, it was a no-brainer for many stock and crypto buyers.

In 2021, Robinhood (and I’m just using them in this example because they’re a popular broker) offered 2.5% margin loans.

Even the most unsophisticated investor could have made money arbitraging 2.5% interest against a 3% cash flowing blue chip stock like Coca-Cola or Consolidated Edison.