Cardinal Update – November 2018

PROTECTING AGAINST THE BEAR – Over the past few years, Cardinal has been making a shift to our portfolios to become more defensive and protect against a market decline. There are two types of market declines that we pay close attention to; corrections and bear markets. A correction, typically a decline of around 10%, can occur sporadically every few months or after multiple years. They have been less frequent since the Great Recession of 2008/2009. Corrections typically do not last very long and are not usually a cause for concern. They are often seen as a healthy reset for the market when optimism has been growing faster than underlying market fundamentals. They also give long-term buyers a chance to buy stocks at bargain rates. A bear market, defined as a 20% pull back or more, is usually led by more serious underlying market concerns. A bear market can occur in tandem with a recession, but not always. 

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