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The Bear Market Bounce Will Be Short-Lived

A Nike store in the Soho neighborhood of New York, US, on Thursday, July 28, 2022. Shoppers are still lining up for certain goods but like investors, they are turning picky.

A Nike store in the Soho neighborhood of New York, US, on Thursday, July 28, 2022. Shoppers are still lining up for certain goods but like investors, they are turning picky.

Photographer: Victor J. Blue/Bloomberg

Don’t be carried away by the recent bear-market rally. We have entered an environment which is the exact opposite of a rising tide lifting all boats. That will be a boon for good stock pickers. 

Many people are breathing a sigh of relief. After a miserable first half of the year, the bloodletting appeared to be over in July, which turned out to be a stellar month for stocks and other risk assets. The Nasdaq 100 is about to enter a new bull market, within a whisker of rising 20% from its lows.