Last Updated on 07/04/2025 by Carl-Peter Lehmann
In challenging market environments, the financial industry usually falls back on a familiar playbook: “Stay invested. Don’t panic. Remember, markets recover. Stick to the plan.”
Since 2009, we’ve essentially lived through a secular bull market – a long-term upward trend, interrupted only briefly by a few cyclical bears (like 2018, the COVID crash of 2020, and the 2022 downturn). Along the way, we’ve been conditioned to believe that any time something goes wrong, the U.S. Federal Reserve and other central banks will simply inject massive liquidity into the system, cushioning the blow and ensuring recoveries are quick and relatively painless.
But if we step back and look further into history, we see long, painful, and severe periods where markets didn’t bounce back for many, many years. Secular bear markets – while rare – are devastating when they occur, and to discount that possibility today would be foolish and irresponsible.
Of course, the financial industry will still roll out the usual comforting messages — partly because they genuinely believe in the long-term resilience of markets, but also because their business models depend on keeping investors fully invested to earn management and advisory fees.
Most of the time, this advice is absolutely right. But what if we’re entering a period that isn’t most of the time? What if we’re stepping into one of those rare secular bears — a long, grinding period that could reshape investment returns, retirement plans, and financial lives?
Let’s unpack the situation properly.
What Is a Secular Bear Market?
A secular bear market is a long-term period, often lasting a decade or more, where stock market returns are flat or negative overall, especially after adjusting for inflation. Unlike a short, sharp cyclical bear market — where markets typically fall 20–40% but recover relatively quickly to new highs — a secular bear is defined by its duration, grinding nature, and psychological toll.
Importantly, a secular bear market isn’t a straight line down. There can be significant rallies during these periods — sometimes lasting months or even years — but ultimately, the market struggles to achieve and hold new all-time highs relative to its previous peak. Progress feels elusive. Each advance is eventually met with another downturn, sapping investor confidence over time.
Secular bear markets don’t just hurt portfolios. They erode confidence, alter behavior, and devastate retirement and investment plans if not navigated carefully.
A 'normal' bear market vs a 'secular bear': The Usual Platitudes vs Reality
Whenever markets wobble, you’ll hear the same advice:
- Stay the course.
- Don’t try to time the market.
- Markets always recover over time.
Most of the time, these are good principles. But secular bear markets are outliers — and outliers demand a different level of thought. They can have devastating psychological and financial impacts:
- Retirement dreams delayed or derailed.
- Businesses and personal wealth diminished.
- Decades of opportunity cost while markets drift sideways or down.
“Just do nothing” isn’t always the right approach when the structural setup has fundamentally changed.
Historical Context: How Bad Can It Get?
History gives us valuable — and sobering — lessons: These weren’t ordinary bear markets. They were long, grinding periods that tested even the most patient investors.
What Assets Have Historically Performed Better During Secular Bears?
Some assets and strategies have historically held up better during these tough periods:
- Cash: Sometimes preserving capital is the best strategy. There is a reason Buffett has been raising significant amounts of cash of late.
- Gold and commodities: Particularly during inflationary environments.
- High-quality government bonds: Defensive, though inflation-sensitive.
- Defensive dividend-paying stocks: Especially essential services.
- Active, tactical asset allocation: Flexibility becomes a real advantage.
No strategy guarantees success, but being diversified and adaptive helps tremendously.
Practical Actions for Different Client Types
Different financial situations require different responses. Here’s how we’re thinking about it practically:
1. Retirees Drawing an Income
- If you’re retired and withdrawing from your portfolio, revisiting your asset allocation is crucial.
- It may make sense to raise cash levels or reduce risk to ensure you’re not forced to sell assets in a falling market.
- The goal is to protect your income stream while managing long-term growth potential cautiously.
2. Offshore Investors (Particularly Equity-Heavy Mandates)
- Investors with heavy offshore equity exposure should also review allocations.
- Tactical de-risking — without abandoning offshore growth opportunities — may be appropriate depending on portfolio objectives and needs.
3. Regular Retirement Annuity or Pension Fund Investors
- If you’re contributing regularly to a retirement annuity or pension fund, keep going.
- Rand-cost averaging works in your favor when prices are volatile and falling.
- Long time horizons mean you can use downturns to your advantage by buying cheaper units.
4. Lump Sum ZAR Discretionary Investors
- If you’ve invested a lump sum in discretionary ZAR-based portfolios, reassess asset allocations.
- Ensure you’re appropriately diversified across asset classes and geographies, and that cash or defensive buffers are in place if needed.
Drawing Parallels from History (and Why It Might Not Help in South Africa)
Trying to draw neat historical parallels for how South African assets might perform relative to global markets is, frankly, next to impossible in today’s environment. South Africa now faces a unique set of economic, political, and structural weaknesses:
- Persistently low economic growth,
- High government debt levels,
- Rising political and geopolitical uncertainty,
- An openly traded and highly volatile currency (which makes us especially vulnerable to shocks).
For example, during the 2000s — often called the “lost decade” for the S&P 500 — emerging markets, including South Africa, boomed. China’s rapid growth drove massive demand for commodities, helping South Africa’s economy expand by over 4% per year in the years leading up to the Global Financial Crisis.
Today, that dynamic simply doesn’t exist. Both South Africa and China are economically weaker, and global demand tailwinds that once lifted emerging markets are far less certain. Expecting South African equities or bonds to repeat their past relative outperformance would be unrealistic — and potentially dangerous for portfolio planning.
Markets Are Fractal — Infinite Possibilities Ahead - and why only fundamental analysis can be limiting
Markets are inherently fractal – meaning they are self-repeating and driven by patterns of human behavior. They don’t move in straight, predictable lines. Instead, they unfold in complex waves of optimism and pessimism, expanding and contracting across multiple timeframes at once. Ultimately, markets are shaped more by collective sentiment than by pure logic or fundamentals – a reality that many investors underestimate.
Over many years, we have studied and followed a wide range of experts:
- Fundamental market analysts,
- Economists,
- Historians,
- Portfolio managers.
Some lean heavily bullish, others lean bearish. Most base their forecasts on fundamental factors like economic growth, earnings projections, interest rates, and monetary policy.
But beyond traditional analysis, we have also followed a specific group of market technicians -specialists who study the structure of market cycles themselves, based on the idea that markets, like human emotions, move in identifiable patterns.
(Without getting overly technical, this body of work — often referred to as elliott wave theory — is based on the view that markets advance and decline in sequences driven by changing crowd psychology, forming fractal patterns that can be analyzed across different scales.)
Over a long period of observation, we’ve found that these technicians have been more accurate and consistent than any other group in identifying major market tops, bottoms, and trend changes.
And for some time now, they have been forecasting that as we move deeper into the second half of the 2020s, we could be entering a deep and prolonged secular bear market. A period not just of short-term volatility, but of sustained, grinding difficulty for investors.
This Isn’t just About Politics - structurral weaknesses have been building for a long time
We want to remain apolitical and avoid trying to apportion blame – we’ll leave that to the media. The longer-term implications are less about who happens to be in office or any single policy decision (like tariffs), and more about the underlying vulnerabilities that have built up over time.
Often, the specific catalyst that sparks a major market event is unknown until after the fact. It’s usually only with hindsight that we identify the moment that set in motion a chain reaction — one that exposes and amplifies the weaknesses already embedded in the global economic engine.
Right now (and on the basis of what we said in the previous paragraph), it’s hard not to look around and observe that we are at a point in time where a convergence of major structural forces has been building steadily beneath the surface:
- Unsustainable debt levels globally,
- Rising populism and social unrest,
- Geopolitical risks and regional conflicts,
- Valuation concerns across many asset classes, where price has outpaced underlying economic fundamentals.
Together, these forces create an environment where the potential for a deeper and longer-lasting bear market than most of us have seen in our lifetimes is very real.
What’s Next: Having a Plan B (and Even Plan C) in Place
As we set out at the beginning, typical advice in times of market stress is to simply “stay the course” — to stick to Plan A no matter what happens. And often, that approach works, particularly during ordinary market corrections, or bear markets that recover ‘relatively’ quickly.
But this time, given the major structural forces converging — and the early signs of deeper fragility emerging — we believe it’s prudent to have a Plan B, and even a Plan C, ready depending on how the market unfolds over the coming weeks and months.
Based on the current market structures we’re observing which will increase the probability that this is indeed the start of what will become something deeper and longer than most are currently anticipating
- After the current wave of selling exhausts itself, it’s likely we’ll see a relief rally — potentially lifting the S&P 500 back into the 5600–5800 range.
- Following that rally, however, we could see a deeper, sharper decline, with the S&P potentially falling toward the 3500–3800 range before finding a more durable intermediate bottom and staging another significant rally.
- And once that next rally completes, there is a real possibility of further declines, even beyond what most investors can easily imagine today — a scenario that could coincide with one of the most severe global recessions (and bear markets) of our lifetimes.
Now to be absolutely clear:
We pray this full bearish path does not materialise. Our sincere hope is that markets stabilize, economies recover, and the world navigates these challenges more gracefully than current risks suggest.
But hope alone is not a strategy. That’s why we believe in preparing thoughtfully for different outcomes — not reacting emotionally after the fact.
As stewards of your capital and partners in your financial journey, we believe it’s critical to share these possibilities with you transparently. In the weeks and months ahead, we’ll be monitoring key technical, macroeconomic, and sentiment indicators closely to adapt and respond proactively if needed.
Having a flexible mindset -and a Plan B (and C) in reserve – could make all the difference.
Final Thoughts: Staying Ahead Together
In the weeks ahead, we’ll be speaking with you (our clients) individually to review your portfolios, discuss the broader implications, and plan for different possible scenarios — not from a place of fear, but from a place of thoughtful preparation.
Where you are in life matters enormously:
- A 65-year-old retiree, living from their capital, faces very different risks than
- A 40-year-old investor, still building their wealth with time on their side.
Our goal is to ensure that your investment strategy aligns appropriately with your personal reality, not just with broad market assumptions.
It’s important to remember: If these events do transpire, there will come a time to buy again.
Periods of deep market distress — as painful as they are — eventually give rise to extraordinary opportunities. Opportunities to buy quality assets at prices that could help build generational wealth — the kind of opportunities that may only come once or twice in a lifetime.
We know many people — including so-called “experts” within the financial industry — will dismiss the risks we’ve outlined. But as we said at the outset, always consider the vested interests at play. Many in the industry have strong incentives to tell investors to “stay the course” no matter what, because their business models depend on it.
At Henceforward, our commitment is different:
- We are here to think independently.
- To prepare prudently.
- To navigate the real risks — not just the ones that are easy to talk about.
carl-peter lehmann and steven hall
Carl-Peter (CP) Lehmann, CFP®, and Steven Hall CFP® are the Directors and Partners at Henceforward, an independent wealth management and financial planning business based in Cape Town, South Africa.
With over 45 years of combined experience in wealth management, financial planning, and offshore investing, CP and Steven co-founded Henceforward with a clear mission: to remove themselves from the vested interests that dominate much of the financial industry, and to deliver truly independent, honest advice — focused solely on helping clients achieve the outcomes that matter most to them.
