A secular bear market is a long period in which stocks and the economy overall make little progress.  There can be small bull runs within secular bear markets which are called cyclical bull markets.  But they don’t run for great durations nor do they make significant new highs.

The most recent example of a secular bear market was the period from 1966-1982.

Dow Jones Industrial Average, 1966-1982

As you can see, this 16 1/2 year period saw a series of cyclical bull and bear markets within the overall context of a great secular bear market in which stocks overall made little progress.

The most recent example of a secular bull market was the period from 1982-2000.

S&P 500, 1982-2000

There were some cyclical bear markets during this mighty stock market run but they were all buying opportunities.

Now consider the last 9 years.

S&P 500, 2000-2009

The peak in October 2007 was at about the same level as the peak in March 2000.  Very little progress has been made in the stock market, and by extension, the economy over the last 9 years.

I believe we are currently in the midst of a secular bear market.  The recent phenomenal two month rally is a cyclical bull market.  The previous two secular periods lasted an average of 17 years.  If that holds this time around, it means we have at least another 8 years before the double top from March 2000 and October 2007 will be taken out. 

Obviously, investing in this kind of market environment is very different from investing in the kind of market environment that existed from 1982-2000.  You have to scalp gains when you have them.  You have wait for extreme distress to buy.  You have to be willing to manage your portfolio more actively since you can’t just count on the market to carry all stocks higher.

Other strategies such as dividend paying stocks, selling covered calls on your long term positions and gold are also ways to grind out returns during secular bear markets.