October Mailbag: A Trick-or-Treat Pillowcase of Your Questions

‘Tis All Hallows’ Eve Eve, and Sir Patrick Stewart has boldly gone to that great starship in the sky. Shall we celebrate the season and salute the great captain with a mailbag? Make it so.

How long will the next bear market last?

Impossible to say. Bear markets don’t run on schedules and are all over the map. (The same holds for bull markets.) Averages don’t predict, but the average S&P 500 bear market is about 19 months in duration since 1929.^[i] With that context, you can see the last two were history’s shortest (2020) and half the average (2022).^[ii] Perhaps society has forgotten what long, brutal bear markets like 2000 – 2002 and 2007 – 2009 feel like. Maybe stocks will deliver a reminder.

One thing you should brace for, however long the next bear market lasts: It will probably feel like forever. Especially toward the end, headlines will tout the outlook as bleak and urge you to disown equities. It is an extension of how the human brain works—think about how you feel several days into a winter cold snap or a bad case of the flu. Bear markets can feel like the sun will never shine again, or like you will never be able to get off the couch. That also tends to be when they end and new bull markets begin. Just as sentiment often gets too positive around a bull market’s peak, it gets excessively negative around the low.

What does a normal bull market look like? What about a normal bear market?

Alas, there is no such thing as normal. If there were, people would have a much easier time identifying both bull and bear markets … and probably make far fewer errors.

But there are some general features. Bull markets are rarely loved in their day. You have probably seen people (us included) say bull markets climb a “wall of worry.” For most of a bull market, the backdrop is pretty fearful. Headlines are bad, and people seize on every bit of volatility as a sign the end is nigh. It is easy to look at an old bull market’s returns and think, that must have been a party! But they rarely feel like one until their euphoric home stretch. Until then, while the returns feel nice, the general mood often feels poor.

As for bear markets, usually, they start slowly, then get ugly late. The slow start often happens when sentiment is hot from the late bull market, so headlines tend to stay pretty cheerful. We call it the “slope of hope.” Headlines call the initial declines buying opportunities and reach high and low for reasons a rebound must be nearby. Their arguments usually defy logic and economic indicators like the yield curve. Eventually, when returns get awful in the final third or so, people capitulate and get really, really pessimistic. That is when you will least want to think about being invested for a rebound, but it is most important.

Why does the Fed target a 2% inflation rate? Why do they even want inflation?

We can think of an economic reason and a cynical one. Let us start with the first: Inflation is a side effect of money supply growth, which is a key economic growth input. This is why Milton Friedman once quipped that we would be better off if the Fed replaced its policymaking with a computer that would simply grow broad money at a stable, predictable rate. But instead we have fallible humans. They deem a 2% annual inflation rate a sign money is growing fast enough to fuel growth without overheating. We think it would be better to focus more on money supply growth, and new Fed head Kevin Warsh alludes to heading that way, but actual moves in that direction are hard to find.

As for the cynical reason, inflation stinks for people but is great for the Treasury. It reduces the value of future debt payments. We will walk you through it. In February 2006, the US Treasury brought back 30-year bonds, selling them at a 4.53% yield.^[iii] If you bought a $10,000 bond at issue, you would get $453 in annual interest. That bond still pays $453 per year. But in 2006 dollars, today’s payment is only $267.[^iv] So inflation made debt cheaper to service in real terms. And when the Treasury replaces the maturing bond with a new one in 2036, $10,000 will be worth far less in today’s money than the original bond in 2006.

Is this a good time to buy gold or silver?

This is also impossible to know. Both are down—way down—from their late-January peaks. (Gold is off -25.2% and silver a whopping -54.6% since.^[v]) If this were stocks, we would look at sentiment and assess whether it was too pessimistic relative to fundamentals like economic conditions, stock supply and the policy landscape. You can’t really do this with gold and silver because they move primarily on sentiment, with big booms and busts and long flat stretches in between. Silver at least has some industrial use, but when sentiment goes crazy it swamps industrial supply and demand factors. Sentiment is notoriously impossible to time. Feelings are fickle. (If you are interested in our thoughts on why gold’s alleged fundamental drivers aren’t real, here you go.)

How much money should someone keep in an emergency fund these days?

There are nuances, depending on your stage of life. And if you have a known, major expense upcoming, that likely increases the need to hold more in cash. But in general, about six months’ worth of typical spending (including rent/mortgage and utilities) is a good guide. That gives a decent cushion in case of job loss, and it will also help with sudden medical expenses and the like. Note, having an emergency fund in cash is wise even if you have a good-sized stock portfolio. That way, you won’t have to sell stocks in a hurry. You can use your cash, then refund it as conditions allow.

Where outside of the US are you seeing growth?

As in positive stock market returns? Lots of places! Per FactSet, of the MSCI All-Country World Index’s 47 countries (which include developed and emerging markets), 34 are up year to date in US dollars through Thursday’s close. Of these, 17 are outperforming the US, including Australia, Canada, Japan and several European countries. This bull market is soooooooooooo much broader than it gets credit for, giving it that unloved status we nodded to back in question two.

What is your favorite Captain Picard moment?

How dare you make us choose!^[vi] But if forced, we will go with that Shakespearean monologue late in season 3 where he hilariously spooled lines from Othello and like five different sonnets to win Counselor Troi’s mom back from the Ferengi. We loved the inspirational speeches and heavy dramatic stuff, too, but the humor got us most of all. Our love … is a fever!

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[i] Source: Finaeon, Inc., as of 10/30/2026.

[ii] Ibid.

[iii] “30-Year Treasury Bond Returns and Demand Is Strong,” Floyd Norris, The New York Times, 2/9/2006.

[iv] Source: US Bureau of Labor Statistics, as of 10/30/2026.

[v] Source: FactSet, as of 10/30/2026. Gold and Silver return, 1/29/2026 – 10/29/2026.

[vi] Kidding, we asked this question of ourselves, purely for fun.