There are bull markets, there are bear markets and then there are boar markets. We're in a boar market. It's boaring. The market hasn't gone anywhere in more than five years and we've been in the same trading range for coming on two years.
From a broker's point of view this is all part of the cycle. We're used to it. Life for us has always been feast or famine and those that have been around know that sometimes the market pays out and sometimes it doesn't and, when it doesn't, clients don't make money, the volumes dwindle and activity dies down. Perfectly normal.
So what do you do in a boar market? Here are some typical reactions, most of them mistakes:
Private investors
Average down, otherwise known as buying a falling market.
Shut your eyes and declare your faith in the long term. Set and forget.
Convert to "value" investing without changing your time horizon from 20 minutes to 20 years.
Turn from investor to trader and attempt cute short-term trading in unpredictable short-term share prices.
Trade even more to compensate for absent capital gains.
Start shorting stocks through leveraged derivatives on line.
Get your credit card out and buy an instant fix, like that $8000 course in option trading.
Declare you are "no good" at investing and exit the market forever.
Broker reactions
Declare every "up" day as the beginning of a new long-term bull market.
Continue to be optimistic. Being 100 per cent optimistic sells more product than being 99 per cent optimistic.
Produce more trading ideas and if they're ignored call them "conviction" ideas. Keep that commission rolling.
Emphasise that the market always goes up, and say "in the long term" when you've put the phone down.
Final resort find a new job earning a salary instead of commission.
More appropriate reactions on the other hand might include:
Trade the range. Without a trend that's all that's left.
Trade less. When I was working at Nomura in London in the 1980s and the market collapsed the head of the trading desk sent four principal traders on holiday for a month to stop them trading. He told them to go and play golf. They did. He saved the firm a fortune. There are times in the market when you are better off spending your money on beer and holidays because at least they deliver some value, more than a dollar lost anyway. Go to Bali for a month. It'll be cheaper than pushing water uphill.
Buy high-income stocks. A natural reaction in a bear market is to forego the concept of making capital gains and instead focus on defensive stocks and income stocks. For those that do not rely on the income, cash (term deposits) is the only defensive stock in a falling market. For those that think they can do better, a word of warning. Not all income stocks are quality or defensive. Many are high yielding because they are crap companies. It's called the yield trap. When it comes to yield more is often less. Look at how much debt they have and how they earn their money. Ask yourself, is it reliable in all conditions?
Beware a really big fall. Even the income investors, keep your eyes open and set some wide stop losses (10 per cent?) and stick to them. Only a few professionals will ever advise you to sell. The job of protecting your net worth from something major is yours.
Adjust expectations. Expectations met are the root of all happiness. If you want to be happy in a boar market you might just have to bite the bullet and shade your expectations a bit, and you'll need to clip those of your dependents as well.
Change your routine. The head of equities at one major broking firm was famous for once going to the cinema in the afternoon in a bear market. And why not? Apart from avoiding losses the main game in a boar market is to amuse yourself somewhere warm until things get better.
Marcus Padley is a stockbroker with Patersons Securities and the author of stockmarket newsletter Marcus Today. For a free trial go to marcustoday.com.au. His views do not necessarily reflect the views of Patersons.
Frequently Asked Questions about this Article…
What is a "boar market" and how does it differ from a bear or bull market?
A "boar market" is the article's tongue-in-cheek term for a boring, range-bound market—neither clearly rising nor falling. Unlike a bull market (sustained uptrend) or a bear market (sustained downtrend), a boar market has little net movement (the article notes the market hadn’t gone anywhere in more than five years and was in the same trading range for about two years). The key feature is lack of a clear trend.
What common mistakes do private investors make in a boar market?
Typical investor mistakes listed in the article include averaging down (buying into a falling market), blindly declaring long‑term faith and 'set and forget', switching to value investing without changing a very short time horizon, trying short‑term trading in unpredictable prices, increasing turnover to chase gains, using leveraged derivatives or shorting without experience, paying for expensive quick-fix courses, or exiting the market entirely after a few disappointments.
How do brokers often react during a boar market and why should everyday investors be aware?
Brokers may declare every up day as the start of a new long-term bull market, stay relentlessly optimistic (100% optimism sells product), churn out trading ideas and relabel ignored ones as 'conviction' ideas, and emphasize 'the market always goes up' after calls end. Those reactions are often aimed at keeping commission and product sales flowing, so investors should watch for bias and sales-driven messaging.
What are more appropriate strategies for everyday investors to use in a boar market?
The article suggests sensible responses: 'trade the range' when there's no clear trend; trade less (avoid needless turnover)—illustrated by a story of Nomura sending traders on holiday to stop trading; consider high‑income or defensive stocks if you need income; keep some cash or term deposits as defensive options; set realistic expectations; and change your routine so you’re not constantly pressured to act in an unhelpful market.
Should I buy high‑income or dividend stocks in a boar market?
Focusing on income and defensive stocks is a natural reaction in a boar market, but the article warns about the 'yield trap': high yield doesn’t always mean quality. Check how much debt a company has and how it earns money—ask if earnings and dividends are reliable in all conditions. If you don’t rely on the income, cash (term deposits) is described as the only truly defensive 'stock' in a falling market.
How can I protect my portfolio from a big fall while investing in a boar market?
The article advises being vigilant for a significant fall and setting wide stop losses (it mentions around 10% as an example) and sticking to them. Very few professionals will tell you to sell, so the job of protecting your net worth from something major falls to you—use stops and risk controls you’re comfortable with.
Is "averaging down" a good idea when prices are flat or drifting down?
The article lists averaging down—buying into a falling market—as a common private‑investor mistake in a boar market. The implication is that averaging down without a clear long‑term conviction or appropriate time horizon can be risky, so treat the tactic cautiously and only use it when you genuinely understand the business and your time horizon matches the investment thesis.
Who wrote the article and where can I read more market commentary like this?
The article is by Marcus Padley, a stockbroker with Patersons Securities and author of the newsletter Marcus Today. The article notes you can get a free trial at marcustoday.com.au and that Marcus Padley’s views do not necessarily reflect those of Patersons.
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