The financial markets have an uncanny way of constantly rewarding those who make the most emotionally difficult choices, while punishing those who make the easy emotional trades like chasing after any trend.
Obviously everyone wants to have the ability to buy any asset at the exact bottom and to sell everything at the exact top. In the real world, of course, this is impossible. There are many methods in attempting to deal with the uncertainty of the fluctuations of any asset. The most popular approach is to wait for an asset to clearly confirm an uptrend and then buy it. This common method’s problem is that, since millions of traders emotionally don’t want to own anything until it has shown definite signs of entering a bull market, the initial surge following a multi-year bottom is usually very powerful as almost everyone tries to crowd in simultaneously.
Fear of losing more money is a much more persistent and stronger emotion than the excitement of potentially making money. The stock market is one giant roller coaster of regret for retail investors, regret for not getting in on time, regret for getting in too late, and regret for being left holding the bag.
With the modern explosion of technical trading and chartists, the markets have transformed so that nearly all powerful moves in one direction are preceded by important false moves in the opposite direction, thereby causing those who would otherwise have made money to be stopped out first. Investors may or may not be clever enough to usually win the game; the market always is.
Because we’re human and market behavior is almost entirely driven by emotions, the duration of uptrends and downtrends reflects nothing related to the company’s or economic fundamentals. It is the amount of time it takes humans to recover from the fear of a powerful negative event as well as how long it takes for their excitement to fade away.