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Anatomy of the Bear: Lessons from Wall Street's Four Great Bottoms
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304 pages, Hardcover
First published August 2, 2007
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About the author
Russell Napier
3 books41 followersRussell Napier is an independent strategist at and co-founder of ERIC, an online platform for the sale of high-quality individually priced investment research. Mr. Napier is a director of the Mid Wynd International Investment Trust and the Scottish Investment Trust.
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Displaying 1 - 28 of 28 reviews
July 20, 2009
Altogether a neat book, clearly written and structured, with an interesting methodology and premise: he digs into the 4 greatest bear markets in the 20thC -- as defined by those points in time at which, if long-term investors had bought in, the acrrued returns over multi-year holding periods would be the largest -- and digs through economic and policy history, including 2 months worth of WSJ reporting prior to and after the market bottom, to identify indicators via which investors today could also bottom fish.
By virtue of its structure, the material is itself interesting as four snapshots in time of the US economy and its structure -- as of August 1921, July 1932, June 1949, and August 1982. For each time period, Napier, a strategist for independent brokerage CLSA, gives a general overview of the years leading up to the exact date, such as the two world wars, the great depression, and the inflationary oil crisis. He describes market structures, in terms of the various industrial sectors ranked by market cap; here, the brief summary of which sectors have grown most rapidly in the preceding bull market (prior to the bear bottom) is interesting. He sorts through various factors that today's investors would recognise -- economic news flow, liquidity, Fed actions, fiscal positions, asset prices, sentiment, etc. The discussion is generally kept factual and non-opinionated. Where Napier provides analysis he demarcates it clearly; I was actually hoping for a bit more analysis on why the indicators he identifies work as they do.
Here is where the true value is. I'm trying to come to terms with inter-market analysis myself, so the read is timely. Just a few key points:
1). Commodity prices, especially metals prices, and within metals copper prices in particular, will cease to fall and stabilise before the markets bottom. The wholesale price index is another interesting lead indicator. Deflationary fears must cease (these were big in 1921 and 1929, but played out to a lesser extent in 1949).
2). The sequence of recovery is typically: government bonds first, then corporate bonds, then equities, with a few months in between bond and equity market bottoms.
3). The auto sector typically recovers ahead of the broader market. (As well as the gambling sector, apparently, but this is only briefly mentioned.)
4). Liquidity is important, but buying on Fed interest rate cuts isn't so reliable as a leading indicator. Fed monetary stance will have eased ahead of a recovery, but you won't always have timed it right by forecasting the benchmark interest rate. More important is the overall wording of Fed statements and its implication for monetary policy going forward. On the whole, though, forecasting Fed action is inconsistently successful. Bank loan growth, though, is another interesting complementary indicator.
5). There is often good economic news at the bottom; but the market seldom reacts to it. Another interesting tidbit -- short interest is usually still large at the bottom, but again, the market hardly reacts, suggesting that all those who want to short are already in their positions, and there is no one left to sell down.
6). It is a myth that a bear market ends with a large volume of selling and a price collapse. It is also a myth that equity prices and valuations collapse rapidly -- this held true only for the 1932 bear; in other major bears, price decline took place over several years, with several large swings (mini-cycles in their own right) in between.
7). Corporate earnings typically bottom 4-7 months before the bear market bottom. (This seems counter-intuitive, given that people think the stock market leads earnings. This is one of the book's loopholes, perhaps, that Napier selects the 4 greatest bears -- at these points, investors had stopped believing in positive signals, so earnings bottoms and started rising, but valuations sank lower, allowing prices to fall further. At lesser bears, such as inventory cycle bears, this may not hold true.)
8). The govt does not need to have cleared its fiscal deficit for the market to recover. (Although perhaps there is a qualitative limit to this that in the 20th C had not been breached. We may be testing this hypothesis in the days ahead.)
Some discretion in applying these indicators is of course necessary. Commodity prices, for example, are today reacting to other factors beside US economic growth; the relative weight of economies is very different today compared to the period Napier analyses. I'm not going to pretend to dissect the above relationships for their underlying principles and contemporary applications, but the historical record does provide interesting thought stubs.
In conclusion: certainly a book worth reading for someone trying to understand macro factors. My main gripe -- apart from that the reader has to bring his own explanatory economic analysis (which is a compliment and not really a fault I guess) -- is that while Napier clearly defines how he picks the points he does, the selection necessarily omits a ton of market price movement in the interim. And come on, who really invests for 20 years and sits on it? Maybe Warren Buffett, a few true long-term value funds and perhaps the SWFs, but not many others. Few of us really have the cashflows, confidence and stomach to hold stuff that long. Also, the focus is on equity markets, investors in other asset classes may find tangential read-throughs but these markets are used more to explain equity movements than investigated in their own right.
By virtue of its structure, the material is itself interesting as four snapshots in time of the US economy and its structure -- as of August 1921, July 1932, June 1949, and August 1982. For each time period, Napier, a strategist for independent brokerage CLSA, gives a general overview of the years leading up to the exact date, such as the two world wars, the great depression, and the inflationary oil crisis. He describes market structures, in terms of the various industrial sectors ranked by market cap; here, the brief summary of which sectors have grown most rapidly in the preceding bull market (prior to the bear bottom) is interesting. He sorts through various factors that today's investors would recognise -- economic news flow, liquidity, Fed actions, fiscal positions, asset prices, sentiment, etc. The discussion is generally kept factual and non-opinionated. Where Napier provides analysis he demarcates it clearly; I was actually hoping for a bit more analysis on why the indicators he identifies work as they do.
Here is where the true value is. I'm trying to come to terms with inter-market analysis myself, so the read is timely. Just a few key points:
1). Commodity prices, especially metals prices, and within metals copper prices in particular, will cease to fall and stabilise before the markets bottom. The wholesale price index is another interesting lead indicator. Deflationary fears must cease (these were big in 1921 and 1929, but played out to a lesser extent in 1949).
2). The sequence of recovery is typically: government bonds first, then corporate bonds, then equities, with a few months in between bond and equity market bottoms.
3). The auto sector typically recovers ahead of the broader market. (As well as the gambling sector, apparently, but this is only briefly mentioned.)
4). Liquidity is important, but buying on Fed interest rate cuts isn't so reliable as a leading indicator. Fed monetary stance will have eased ahead of a recovery, but you won't always have timed it right by forecasting the benchmark interest rate. More important is the overall wording of Fed statements and its implication for monetary policy going forward. On the whole, though, forecasting Fed action is inconsistently successful. Bank loan growth, though, is another interesting complementary indicator.
5). There is often good economic news at the bottom; but the market seldom reacts to it. Another interesting tidbit -- short interest is usually still large at the bottom, but again, the market hardly reacts, suggesting that all those who want to short are already in their positions, and there is no one left to sell down.
6). It is a myth that a bear market ends with a large volume of selling and a price collapse. It is also a myth that equity prices and valuations collapse rapidly -- this held true only for the 1932 bear; in other major bears, price decline took place over several years, with several large swings (mini-cycles in their own right) in between.
7). Corporate earnings typically bottom 4-7 months before the bear market bottom. (This seems counter-intuitive, given that people think the stock market leads earnings. This is one of the book's loopholes, perhaps, that Napier selects the 4 greatest bears -- at these points, investors had stopped believing in positive signals, so earnings bottoms and started rising, but valuations sank lower, allowing prices to fall further. At lesser bears, such as inventory cycle bears, this may not hold true.)
8). The govt does not need to have cleared its fiscal deficit for the market to recover. (Although perhaps there is a qualitative limit to this that in the 20th C had not been breached. We may be testing this hypothesis in the days ahead.)
Some discretion in applying these indicators is of course necessary. Commodity prices, for example, are today reacting to other factors beside US economic growth; the relative weight of economies is very different today compared to the period Napier analyses. I'm not going to pretend to dissect the above relationships for their underlying principles and contemporary applications, but the historical record does provide interesting thought stubs.
In conclusion: certainly a book worth reading for someone trying to understand macro factors. My main gripe -- apart from that the reader has to bring his own explanatory economic analysis (which is a compliment and not really a fault I guess) -- is that while Napier clearly defines how he picks the points he does, the selection necessarily omits a ton of market price movement in the interim. And come on, who really invests for 20 years and sits on it? Maybe Warren Buffett, a few true long-term value funds and perhaps the SWFs, but not many others. Few of us really have the cashflows, confidence and stomach to hold stuff that long. Also, the focus is on equity markets, investors in other asset classes may find tangential read-throughs but these markets are used more to explain equity movements than investigated in their own right.
February 7, 2019
Pros: It is a good reference book which helps to understand the DJIA development in 20th century.
Cons: The terminology used in the book is slightly different from others. In addition, it is a very dry book. It has lots of facts and data. The author just tried to explain those information but failed to connect the dots.
Overall, it doesn’t offer a pleasant reading experience.
Cons: The terminology used in the book is slightly different from others. In addition, it is a very dry book. It has lots of facts and data. The author just tried to explain those information but failed to connect the dots.
Overall, it doesn’t offer a pleasant reading experience.
August 22, 2018
This is a study of the four best moments to buy American stocks in history, namely 1921, 1932, 1949 and 1982. These occasions were followed by long secular bull markets. At all these buying opportunities the valuation was low, but how do you know when the market is cheap enough and won’t continue down to become even cheaper? How do you time the troughs? Russell Napier, previously the Asian equity strategist at the Chinese investment bank CSLA and a manager of both American, Japanese and Asian equity portfolios, tries to answer this question by reviewing 70.000 articles in the Wall Street Journal during the months’ adjacent to the four market bottoms.
The author mixes the studies of the bottoms with descriptions of both the equity and the bond market as they developed the years before the troughs. Combined this gives the reader an exposé of the American financial markets from the 1890’s to the 1980’s. There are numerous experiences to be drawn that aren’t strictly tied to timing the bottoms. One is that media headlines don’t seem to be all negative at the time of the buying opportunities. Even in 1932 the news was rather more mixed but investors choose to ignore the light in the tunnel.
Another aspect is the longevity of the bear markets that precedes the buying opportunities. Napier finds it unfortunate that the crash of 1929/32 has become the epitome of how an overvaluation in three years by a dramatic fall of 89 per cent is turned into an undervaluation. The more normal rote to undervaluation is rather a 14 year long consolidation period during which the stock market goes nowhere or slightly down, but the corporate earnings continue to grow. Further, the bear markets often coincided with serious disturbances in the general price level, like the high inflation of the 1970/80’s, the inflation turning to deflation 1921 and 1949 and the severe deflation of 1932. All and all this is a very useful read. There is plenty written about the big bubbles and how they pop, but you never read that much about the most important troughs. The historical perspective is important for anyone trying to understand the present and it’s a sympathetically written text but at times I found it to be somewhat cumbersome. Also it’s not easy to get a comprehensive picture of a course of events from a number of cuts from news articles.
So how do you time the troughs? For a start the market must be really cheap. Measured by the so called q, the corporate capital of America traded on 30 per cent of replacement value and the Shiller-PE was between 4,7 and 11,7. In four out of four troughs there was a stabilization of commodity prices and especially a rising copper price worked as a good indicator. Also look for confirmation of the sustainability of the price rise from low inventory levels. The economy and the stock market on average turned up simultaneously and even if this was apparent only in retrospect one consistent sign that this was the case was that a rise in auto stocks preceded the general stock market. Prices in government bonds in these instances turned much too early to be a good indicator but corporate bonds worked as a much timelier indicator where prices stabilized a few months ahead of the buying opportunities in stocks. On top of that, the Dow Theory worked. What didn’t work was to wait for a turn of corporate profits or an improvement of the fiscal situation. Those improved much too late.
You really must question the use of listening to economic commentators after reading this book. At every bottom there were numerous persons with both positive and negative arguments, both equally persuasive and presenting argument you could have heard almost anytime on Wall Street the last ten or twenty years.
The author mixes the studies of the bottoms with descriptions of both the equity and the bond market as they developed the years before the troughs. Combined this gives the reader an exposé of the American financial markets from the 1890’s to the 1980’s. There are numerous experiences to be drawn that aren’t strictly tied to timing the bottoms. One is that media headlines don’t seem to be all negative at the time of the buying opportunities. Even in 1932 the news was rather more mixed but investors choose to ignore the light in the tunnel.
Another aspect is the longevity of the bear markets that precedes the buying opportunities. Napier finds it unfortunate that the crash of 1929/32 has become the epitome of how an overvaluation in three years by a dramatic fall of 89 per cent is turned into an undervaluation. The more normal rote to undervaluation is rather a 14 year long consolidation period during which the stock market goes nowhere or slightly down, but the corporate earnings continue to grow. Further, the bear markets often coincided with serious disturbances in the general price level, like the high inflation of the 1970/80’s, the inflation turning to deflation 1921 and 1949 and the severe deflation of 1932. All and all this is a very useful read. There is plenty written about the big bubbles and how they pop, but you never read that much about the most important troughs. The historical perspective is important for anyone trying to understand the present and it’s a sympathetically written text but at times I found it to be somewhat cumbersome. Also it’s not easy to get a comprehensive picture of a course of events from a number of cuts from news articles.
So how do you time the troughs? For a start the market must be really cheap. Measured by the so called q, the corporate capital of America traded on 30 per cent of replacement value and the Shiller-PE was between 4,7 and 11,7. In four out of four troughs there was a stabilization of commodity prices and especially a rising copper price worked as a good indicator. Also look for confirmation of the sustainability of the price rise from low inventory levels. The economy and the stock market on average turned up simultaneously and even if this was apparent only in retrospect one consistent sign that this was the case was that a rise in auto stocks preceded the general stock market. Prices in government bonds in these instances turned much too early to be a good indicator but corporate bonds worked as a much timelier indicator where prices stabilized a few months ahead of the buying opportunities in stocks. On top of that, the Dow Theory worked. What didn’t work was to wait for a turn of corporate profits or an improvement of the fiscal situation. Those improved much too late.
You really must question the use of listening to economic commentators after reading this book. At every bottom there were numerous persons with both positive and negative arguments, both equally persuasive and presenting argument you could have heard almost anytime on Wall Street the last ten or twenty years.
November 11, 2018
Key points to note
1. Commodity prices
2. Auto sales
3. Market fall on falling volumes and market rise on rising volumes
4. Market reaction to good and bad news
5. Number of shorts in the system and outstanding shorts on rise in markets
1. Commodity prices
2. Auto sales
3. Market fall on falling volumes and market rise on rising volumes
4. Market reaction to good and bad news
5. Number of shorts in the system and outstanding shorts on rise in markets
May 9, 2017
One of my daughter’s favourite books so far in her short life has been “We’re going on a bear hunt”, a tale of how an incredibly irresponsible parent leads his family across treacherous deep rivers, through snowstorms and swamps in search of a bear, of whom part of the repetition so loved by toddlers is that “we’re not scared”.
It turns out that actually they are terrified of bears and have to make the same crazy journey in reverse, just this time at breakneck speed with a bear, erm, bearing down on them.
The lack of planning and preparation for both the journey and the panic induced when actually confronted with a bear could have been avoided had the family read Russell Napier’s book. Not only does it analyse the four most vicious bears in the history of Wall Street but gives you firm pointers as to how to spot them, what they all had in common, and what to do when confronted by one.
Russell Napier is a historian and Professor who has used his ability to analyse the stock market with the most complete and reliable data in history – the US equity market. Some of the data used to explain the backdrop to the 1921 bottom goes back to the 19th century; the Dow Jones Industrial Average (DJIA) was first published in 1896 (the New York Stock Exchange opened its doors in 1792).
The four great bear market bottoms in this book are defined by the returns over the following 40 years had an investor bought shares at the point the DJIA bottomed. Napier concentrates his research on what was happening at those times and more importantly what those great bottoms had in common, and whether the bear would be identifiable when it happens again. To do this he has read over 70,000 contemporary articles from the Wall Street Journal (first published in 1889) to gauge the levels of sentiment.
Taking the two months either side of the four great bear market bottoms as the time to study the WSJ is a great way to use contemporary commentary to illustrate what was going on in the markets and the general economy and what clues we can gain to inform us when the next great bear market bottom might be.
The problem with this method is that it fails to analyse all the times when similar commentary occurred during other periods of economic fluctuation that weren’t part of one of those great bottoms. How are we meant to know that there haven’t been other similar periods of commentary that could have been mistaken for a great bear market?
It is unrealistic to have expected Napier to analyse all the commentary in the WSJ in addition to the articles he’s already analysed as part of this book, and I suspect that the exercise was a worthy one in forming the conclusions he came to; but I find myself thinking about what is being published in the news today and wondering what Russell thinks of it. Is the news bad enough and being ignored enough to suggest we’re at the peak of a bull market?
What can’t be denied is the rigour of Napier’s research or his ability to forecast – the prefaces of the three previous editions correctly predicted the direction of the markets over the next few years, more or less. This latest preface describes why there will be an imminent dramatic decline in US equities and how investors can use the lessons from history to spot the bear at the bottom of the market and benefit from it.
Is the bottom of the bear market that started in 2000 still to be reached? Or will history show it to be in 2009? Either way, read this book to find out how to spot a bear and know what to do once you have got close enough to tickle its shiny wet nose.
It turns out that actually they are terrified of bears and have to make the same crazy journey in reverse, just this time at breakneck speed with a bear, erm, bearing down on them.
The lack of planning and preparation for both the journey and the panic induced when actually confronted with a bear could have been avoided had the family read Russell Napier’s book. Not only does it analyse the four most vicious bears in the history of Wall Street but gives you firm pointers as to how to spot them, what they all had in common, and what to do when confronted by one.
Russell Napier is a historian and Professor who has used his ability to analyse the stock market with the most complete and reliable data in history – the US equity market. Some of the data used to explain the backdrop to the 1921 bottom goes back to the 19th century; the Dow Jones Industrial Average (DJIA) was first published in 1896 (the New York Stock Exchange opened its doors in 1792).
The four great bear market bottoms in this book are defined by the returns over the following 40 years had an investor bought shares at the point the DJIA bottomed. Napier concentrates his research on what was happening at those times and more importantly what those great bottoms had in common, and whether the bear would be identifiable when it happens again. To do this he has read over 70,000 contemporary articles from the Wall Street Journal (first published in 1889) to gauge the levels of sentiment.
Taking the two months either side of the four great bear market bottoms as the time to study the WSJ is a great way to use contemporary commentary to illustrate what was going on in the markets and the general economy and what clues we can gain to inform us when the next great bear market bottom might be.
The problem with this method is that it fails to analyse all the times when similar commentary occurred during other periods of economic fluctuation that weren’t part of one of those great bottoms. How are we meant to know that there haven’t been other similar periods of commentary that could have been mistaken for a great bear market?
It is unrealistic to have expected Napier to analyse all the commentary in the WSJ in addition to the articles he’s already analysed as part of this book, and I suspect that the exercise was a worthy one in forming the conclusions he came to; but I find myself thinking about what is being published in the news today and wondering what Russell thinks of it. Is the news bad enough and being ignored enough to suggest we’re at the peak of a bull market?
What can’t be denied is the rigour of Napier’s research or his ability to forecast – the prefaces of the three previous editions correctly predicted the direction of the markets over the next few years, more or less. This latest preface describes why there will be an imminent dramatic decline in US equities and how investors can use the lessons from history to spot the bear at the bottom of the market and benefit from it.
Is the bottom of the bear market that started in 2000 still to be reached? Or will history show it to be in 2009? Either way, read this book to find out how to spot a bear and know what to do once you have got close enough to tickle its shiny wet nose.
September 17, 2022
The book analyzes 4 major bear markets in the US - 1921, 1932, 1949 and 1982.
But overall, the book is a bit dry and the narratives too rigid. I wish the author can summarise and generalize more, rather than just describing what happened in those years. In addition, the quotations from newspapers were a bit too redundant, lacks of commentary.
1. Bear markets are associated with: loss of competitiveness, deterioration in external accounts, tightening liquidity, economic contraction and a decline in general price level.
2. From 1881 to 1921, investors had no capital return for 40 years.
3. At the end of the bear market - investors refuse to regard any development as constructive, even when there was ample good news. Bear market bottoms are characterised by an increasing supply of good economic news being ignored by the market. bulls will be ignored.
4. Economic and stock market recoveries roughly coincide.
5. The bottom is preceded by a period in which the market declines on low volumes and rises on high volumes.
6. Bull market = technological breakthrough + increased availability of credit.
7. The combination of a large short position with a market that does not decline on bad news was a positive indicator of a rebound.
8. Inflation, and the fight against it, drove the 1968-1982 bear market. In real terms, S&P declined 63% from 1968 to 1982.
9. Equities become cheap slowly. On average, it took nine years for equities to move from peak to trough.
10. The change in the trend of copper price has been a particular accurate signal to predict equity prices.
11.
9.
But overall, the book is a bit dry and the narratives too rigid. I wish the author can summarise and generalize more, rather than just describing what happened in those years. In addition, the quotations from newspapers were a bit too redundant, lacks of commentary.
1. Bear markets are associated with: loss of competitiveness, deterioration in external accounts, tightening liquidity, economic contraction and a decline in general price level.
2. From 1881 to 1921, investors had no capital return for 40 years.
3. At the end of the bear market - investors refuse to regard any development as constructive, even when there was ample good news. Bear market bottoms are characterised by an increasing supply of good economic news being ignored by the market. bulls will be ignored.
4. Economic and stock market recoveries roughly coincide.
5. The bottom is preceded by a period in which the market declines on low volumes and rises on high volumes.
6. Bull market = technological breakthrough + increased availability of credit.
7. The combination of a large short position with a market that does not decline on bad news was a positive indicator of a rebound.
8. Inflation, and the fight against it, drove the 1968-1982 bear market. In real terms, S&P declined 63% from 1968 to 1982.
9. Equities become cheap slowly. On average, it took nine years for equities to move from peak to trough.
10. The change in the trend of copper price has been a particular accurate signal to predict equity prices.
11.
9.
June 1, 2022
The author analyses four bear markets where stocks were extremely undervalued, in order to find events that signal the bottom of the bear markets. He does this using the q ratio (or Tobin's q) as the measurement tool. These four bottoms are: 1921, 1932, 1949, 1982.
I found the content pretty dry, full of numbers & data that he uses to draw on his conclusions, but without much of a back story (some context may be useful when you're reading about companies in the 1920s that you know nothing about). The upside is that there are also many charts, which helps the reader visualize some of the data a bit easier.
The reader that wants to skip some parts can do so without worry, because the conclusions at the end of the book really draw all the important points that he discusses all throughout the book.
One other thing I have to appreciate is that the book delivers on the promise of the title - it really is an "anatomy" of the bears.
In the end though, the conclusions should be taken with a grain of salt - studying a data set of only 4 events does not give me enough confidence to conclude that the same signals will predict the end of the next bear, especially since some of the signals don't even happen in all 4 cases.
I found the content pretty dry, full of numbers & data that he uses to draw on his conclusions, but without much of a back story (some context may be useful when you're reading about companies in the 1920s that you know nothing about). The upside is that there are also many charts, which helps the reader visualize some of the data a bit easier.
The reader that wants to skip some parts can do so without worry, because the conclusions at the end of the book really draw all the important points that he discusses all throughout the book.
One other thing I have to appreciate is that the book delivers on the promise of the title - it really is an "anatomy" of the bears.
In the end though, the conclusions should be taken with a grain of salt - studying a data set of only 4 events does not give me enough confidence to conclude that the same signals will predict the end of the next bear, especially since some of the signals don't even happen in all 4 cases.
April 26, 2023
Well written, considering the subject matter is rather dry. There are several pages of excerpts from newspaper blurbs of the day which I don't think add too much information. This is on several lists of best books on bear markets and focuses on what indicators can reveal when a bear market has bottomed out. The author carefully reviews data from the four largest bear markets in the 20th century to see what they have in common: 1921, 1932, 1949 and 1982. I had never heard of the "q ratio", which makes a lot of sense. Some common indicators included the auto market rebounding, copper prices are also a good indicator, S&P 500 P/E is historically around 16, so if it's unusually lower than 16, if price stability starts to improve, and if the Fed lowers the discount rate. Instead of pinpointed accuracy, the author provides you with things to notice. Today's q ratio is 1.2x, bear markets have bottomed out around 0.3x, so right there it tells you it's a mistake to think this market has bottomed out. Investing on the way down is like catching a falling knife, author helps you know if the knife has landed and it's safer to buy.
January 9, 2022
The book is an account of four major bear markets in the 20th century.
It is a bit dry as it deals with scores of data. On top of that, the author definitely prefers tables to graphs which is a clear sign he is an example of an "old league" investor.
This is not an easy read. Would classify it as a 20th-century bear market almanac. If you need any data on 1921, 1932, 1949 or 1982 recessions, this book has it. You just need to dig to find it. Reading the book throughout was a bit of a pain as by the 1949 chapter, it was clear, identifying the bear market bottom was not an easy task.
If you don't have time to read the book and want to know what signals the bottom of the bear market, please follow Dr Copper. Q ratio below 0.3 might also be a good indicator. And that's about it... Not much else can reliably point the bottom.
It is a bit dry as it deals with scores of data. On top of that, the author definitely prefers tables to graphs which is a clear sign he is an example of an "old league" investor.
This is not an easy read. Would classify it as a 20th-century bear market almanac. If you need any data on 1921, 1932, 1949 or 1982 recessions, this book has it. You just need to dig to find it. Reading the book throughout was a bit of a pain as by the 1949 chapter, it was clear, identifying the bear market bottom was not an easy task.
If you don't have time to read the book and want to know what signals the bottom of the bear market, please follow Dr Copper. Q ratio below 0.3 might also be a good indicator. And that's about it... Not much else can reliably point the bottom.
August 21, 2020
Extremely extensive and detailed study of major bear markets. Excellent book if you’re a student of financial history, but lesser of a practical guide if you’re looking for transferable trading strategies, ways to profit, or patterns to identify the bottom of a bear market. It also fall short of humour and a human narrative which makes it quite difficult to read and absorb at times.
The collection of “daily news clip” is quite unique for its kind - it shows you what mattered at the time when the events unfolded, offers a parallel experience as if you’re “living through” the bear markets, and shows how history does repeat itself.
The collection of “daily news clip” is quite unique for its kind - it shows you what mattered at the time when the events unfolded, offers a parallel experience as if you’re “living through” the bear markets, and shows how history does repeat itself.
December 3, 2022
This book is the result of an impressive work on economic history research, therefore is not for everyone, definetely not easy to read, although the author made it understandable with the minimum possible requirements.
It covers the 4 great bear markets of recent history with and incredible detail and various perpectives. The 4 periods are the ones that have generated more profit to investors of the time, and the goal is helping the reader indentify those opportunities.
The book succesfuly resumes a ton of information while including some actual coments and news from each period, even giving the reader room to extract his own conclusion.
It covers the 4 great bear markets of recent history with and incredible detail and various perpectives. The 4 periods are the ones that have generated more profit to investors of the time, and the goal is helping the reader indentify those opportunities.
The book succesfuly resumes a ton of information while including some actual coments and news from each period, even giving the reader room to extract his own conclusion.
July 17, 2022
As a novice personal investor, I thought this would be a "bit heavy" for me. But actually, it's a very relevant book, what with us being in a bear market. It follows a similar format throughout, making for relatively easy understanding. I had to google the odd term, but generally it's pretty clear in its conclusions. In these chastened times : highly recommended.
May 2, 2020
An useful, informative and timely read on previous bear markets. However, it is dry, boring, and it sometime comes up with unfamiliar financial jargons without proper explanation. That said, this is bearable if you are used to reading sellside equity reports.
March 17, 2023
7/10 El libro analiza los 4 principales mercados bajistas del S.XX. Muy bien documentado pero en ocasiones abusando demasiado de las tablas, datos, artículos de prensa, etc. y eso lo hace un poco árido en ocasiones.
Read
December 16, 2025A thorough study of news, numbers, and sentiment. I found this edition the most relevant because it preceded the 2008 crisis, so it's observations were unaware of what was coming, which I think is more valuable than hindsight confirmations.
May 10, 2020
This is a very good book. Anyone concerned with investing with historical context, will benefit from this. It does take some discipline to wade through it all, but less than you might imagine.
September 15, 2022
More use of visualizations would have made the books much more enjoyable to follow. All we get is a couple of graphs here and there, and A LOT of tables of figures.
July 7, 2010
The use of financial history as a guide to understanding market behavior fell out of fashion in the 1970's upon the rise of Efficient Market Theory. But now that recent events have discredited the theory quite conclusively (one would hope anyhow...), Napier's approach is gaining currency, and for good reason. By making a case study of Wall Street's four great market bottoms, Napier shows that although past is never prologue, one can nonetheless glean from extremities in market cycles certain features that will serve as strong signals for future market movements.
June 10, 2016
This book talks about 4 brutal bear markets & biggest stock market slumps in US economic history, hovers around the great depression & recession periods of 1929, 1932, 1949 & 1982 with interesting facts & figures.
Author had done quite a work in garnering information from enormous source & exhibited in a way where a reader can conclude/arrive at investment decision on his own.
People with belief/faith in value investing philosophy would find this as a fascinating read & a wealthy source for reference.
Voluminous book with short fonts but deserve a re-read in my opinion.
Author had done quite a work in garnering information from enormous source & exhibited in a way where a reader can conclude/arrive at investment decision on his own.
People with belief/faith in value investing philosophy would find this as a fascinating read & a wealthy source for reference.
Voluminous book with short fonts but deserve a re-read in my opinion.
September 17, 2015
20세기 미국 시장의 4번의 대침체장 당시의 여러 지표와 뉴스 기사를 분석해서 침체장들 사이의 공통점과 차이점 등을 이해할 수 있는 좋은 참고도서이다. 시장의 바닥에서는 좋은 뉴스와 지표들이 나와도 반응이 없음을 알게 됐다. 우리가 알고 있던 통념과는 다르게 악재가 쏟아질 때가 바닥이 아니라는 것이다. 교육적인 측면에서는 별 5개를 주고싶지만 무미건조한 필체 탓에(번역탓일 수도 있고, 제레미 시겔 책들도 그랬듯이 데이터 기반의 실증적 책인 탓일 수도) 읽기가 정말 힘들었다.
September 8, 2016
precise explanation using actual examples of behavioral analysis to explain how bear markets bottom and could in fact be carried over to the 2008 short lived bear market in the wake of the financial crisis.
February 15, 2017
A book to reread in the near future under Trump presidency probably. Good addition to my checklist. liquidity/commodity stability/bond price/central bank liquidity/inventory/volume, and patience (it takes 9-14 years to see the low from the peak in the history).
October 31, 2008
Brilliant
January 30, 2009
An excellent empirical study of the outstanding conditions and manifestations of the 4 great bear markets in US history and how each bottomed (wonder how this one's gonna look in relation)
May 16, 2009
The common wisdom about bear markets is generally wrong.
March 7, 2016
some interesting observations, but not sure how true/useful they really are.
October 24, 2025
Enjoyable account of financial history, and the bargains to be had at bear market bottoms.
November 11, 2017
Napier doing a analysis to find the four best times for buy and hold strategy for US equity in 20th century. The analysis is fairly simple to understand but in modern times for people who have never seen any long run bear markets, it would seem a fictional story. Enjoyable if you like history of markets.
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