The bear market in US stocks is not over yet, in fact it has only just begun. Although the S & P has fallen 19 per cent from its all-time high and the Nasdaq composite index and the Russell 2000 have entered bear market regions, many investors are more concerned about when and what to buy than about whether the stock market will fall sharply further.

This bottoming is reminiscent of what Wall Street calls the "slope of hope" of a bear market, rather than the "wall of worry" of a bull market. The "slope of hope" refers to the occasional short-term rebound during the decline of the stock market in the medium to long term, which investors mistakenly think means that the stock market will rise in the medium to long term, so they enter the market again until it is hit by such hope; the "wall of worry" refers to the trend that the stock market surpasses a series of negative factors and continues to rise.

This is not to say that the US stock market cannot rebound sharply from its current level, and if so, such a rebound is more likely to be a bear market rebound than the beginning of a new bull market that will push major stock indexes to record highs.

Looking back on the bear market in the past, you will find that when a bear market does have a bottom, few investors think about whether it will happen at the bottom, or they don't care at all because investor sentiment is so depressed that they admit defeat. Or treat all signs of a strong stock market as a bear market trap.

That's not the mood on Wall Street at the moment. The development of bear market psychology is similar to what psychologists call the five stages of sadness-denial, anger, redemption, depression and acceptance. The following is the performance of these five stages in the stock market:

Deny:At this initial stage, investors generally see the weakness of the stock market as an opportunity to buy, and instead of being angry (see the next stage), they are quite optimistic because the correction in the stock market presents an opportunity. allows investors to buy stocks at lower prices than in a bull market.

Anger:As the stock market falls harder and harder to maintain, investor sentiment eventually turns into anger, complaining that the stock market should not have fallen like this. One feature of this stage is that investors see the fall in the stock market as an affront to themselves, as if the market cares whether you or I will lose money.

Redeem:At this stage, investors are focused on maintaining their lifestyles after their portfolios are hit, and retirees reformulate their financial plans. some people will give up unnecessary expenses such as buying a new car or going on holiday in Europe.

Frustration:As the stock market continues to fall, investors are beginning to realize that reducing unnecessary spending is not enough and that major lifestyle changes must be made. People who are about to retire will delay their retirement and those who have already retired will return to work.

Accept:In this final stage, investors finally throw in the towel, surrendering to the bear market and no longer even fantasize about when the bear market will end. and see all signs of stock market strength as a trap to tempt gullible people to lose more in the next round of deception.

EyeWhat is the stage of former investor sentiment?

The author believes that investors are currently in the second stage of this five stages, but there must be exceptions, because not all investors are at the same pace. However, the general situation that I have learned so far is that investors either think that a correction is a buying opportunity (stage 1) or that the stock market should not fall like this (stage 2).

In one case, some investors say they have thrown in the towel and then quickly join the bullish ranks when the stock market shows signs of strengthening, which is still the first stage of behavior.

Speaking of which, I recall that recently someone claimed to have seen signs of surrender on Wall Street. If the surrender is true, it is evidence that investors have entered the fifth stage. But the author is skeptical: if investors do surrender, they will not rush to look for signs of surrender, the main signs of real surrender are apathy and indifference.

Of course, investors don't go through these five stages in all bear markets, just as not all pullbacks turn into bear markets. Therefore, what is discussed in this article is not to say that the stock market still has a lot of room to fall, but if the bulls want to use reverse analysis to support their view that the stock market will rebound, then they must first see the real surrender. Otherwise, their argument can only prove that the stock market decline has only just begun.