The bear market is over unless it isn't.

The stock market was up a bunch again today and is up about 9% from the low on Christmas Eve. At the low point the S&P 500 did breach a 20%, decline even if just momentarily, and 20% is a level that many would say makes a bear market "official" (this is of course ridiculous notion but that's beside today's point).

The correct answer, of course, is that no one knows if the bear is over and maybe we will all conclude it wasn't really a bear market. Plenty will guess and everyone who appears on stock market television will tell us after the fact how right they were. I started in May of 2018 saying that I believed a bear market had started and that belief was "right" for a short while, then looked very wrong for a longer stretch, then it looked right again, then really right and now looks wrong. It is still too early to know.

What we do know is that the market currently has a lot of characteristics of previous bear markets which is right, unless this is one of those times that isn't right. That ambiguity encapsulates why I implement defensive measures the way I do; slowly and deliberately.

With the S&P 500 still a ways below its 200 day moving average (DMA) and the increased volatility I want the portfolio to be less volatile than the market. As a quick recap, we bought BTAL in May, SH in October, TAIL in December, PTLC switched to cash a couple of months ago and we sold VOX. The defense was far more about adding protection than selling holdings.

Any time I write a post about what action I take, I hope it is clear that I am conceding I could be wrong and what I am doing or at least thinking if it turns out to be wrong. If the SPX rockets to 4000 then the consequence of owning a few shares of the above-mentioned funds is dramatically less than it would be had we sold everything and went to cash. The potential consequence is a lag, not a complete miss. I can't tell you whether a lag should be ok as I have described it but it works with my way of thinking and managing risk and volatility.