Ecoinometrics - Window of opportunity

In a bear market, how long do you have to take advantage of the best deals.

The probability of a global recession is high. As a matter of fact we are probably already in one. 

That being said, the economy has just slowed down. It hasn't completely stopped. 

So chances are when that happens the financial markets will experience a liquidity crisis and everything will be on sale.

That's great news if you still have some cash on hands. But how big will this window of opportunity be?

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Window of opportunity

We have been in a drawdown for almost a year now. 

That might feel like a long time. But if you look at the chart you'll see that it typically takes a few years to recover from drawdowns of this size. And it is likely we haven't even seen the bottom yet.

So at this point you are probably in one of three situations:

• You have been quietly dollar cost averaging while waiting for better days.

• You have already spent a lump sum on whatever asset you wanted to acquire. Your bags are full.

• You are holding on some dry powder to splurge during a fire sale.

I mean, you are allowed to do all three at the same time I guess. But if you are in the third category then the main question is when to pull the trigger. 

Now we know that trying to time the exact bottom is a waste of time. Things can always get worst.

So we are better off thinking in terms of window of opportunity in the bear market where you can get very good deals.

But how big are those windows of opportunity? 

Let's take a look at the historical bear market for Bitcoin and the stock market to try to figure this out.