Welcome to my latest video presentation. Below is a condensed transcript; my video contains further details and several charts.

The bear market grinds on, but considering the negative economic data and overall headwinds, it’s telling that stocks haven’t fallen even further.

Equities demonstrated surprising stamina last week, avoiding a total rout despite inflation reports that were much hotter than expected. The consumer price index, the producer price index, and a survey of inflation expectations all provided grim news and cemented a rate hike of at least 0.75% when the Federal Reserve’s policy-making arm, the Federal Open Market Committee (FOMC) meets in November.

The PPI released on Wednesday, followed by the CPI on Thursday, both for the month of September, showed that inflation is still sizzling hot at the wholesale and consumer levels. And yet, the market’s sharp rally on Thursday tells me that there’s already a lot of negative sentiment “baked into the cake” with stock and bond prices, and we’re getting closer to the end of the bear market.

U.S. stocks soared Thursday, with the Dow Jones Industrial Average staging an historic 1,500-point intraday swing, closing with a rise of 827 points and regaining 30,000. The overall surge in equities provided a bulwark against the bad news. The Dow actually managed to notch a 1.2% gain for the week, although the other major indices posted a weekly loss (see video for details).

On Monday, the major U.S. stock market indices closed sharply higher, as follows: the Dow +1.86%; the S&P 500 +2.65%; the tech-heavy NASDAQ +3.43%; and the small-cap Russell 2000 +3.17%. Fueling bullishness was Bank of America’s (NYSE: BAC) announcement before the opening bell Monday that its third-quarter earnings and revenue beat consensus expectations.

Last week was an extraordinary roller-coaster ride for the financial markets. We probably haven’t witnessed the end of volatility, as the Russia-Ukraine war worsens, inflation stays stubbornly high, and the global economy contracts. Oil prices last week fell 7.4%, despite the hefty OPEC+ crude oil production cut, as traders bet that slumping economic growth would crush energy demand.

Bear markets are painful, but patience is rewarded. The rookie mistake is to panic and sell into weakness, but as surely as day follows night, bear markets are always followed by bull markets.

Consider the Great Financial Crisis and Recession of 2007-2009, during which the S&P 500 declined 57%. One year later, the S&P 500 was up 72% and two years later it was up 103%. The average decline of the past seven bear markets, going back to 1961-1962, has been 40%, with average post-bear bounces of 47% (one year) and 74% (two years). My video provides a detailed chart of these seven impressive post-bear rebounds.

The lesson? Hang in there. Don’t abandon your long-term plan. Position yourself for the next bull run, by pinpointing the megatrends that will unfold after this bear ends. Selloffs are an integral part of investing.

One day, many of the headwinds we’re currently enduring will subside. Innovative technologies already in gestation will explode onto the scene, including autonomous electric vehicles, DNA editing, 3D printing, space exploration, the Internet of Things, and marijuana…yes, marijuana, especially the creation of new drugs based on cannabis compounds.

The research firm New Frontier Data recently analyzed the financial ramifications of current federal and state legalization efforts. Based on which initiatives are likely to pass during the November midterm elections and beyond, combined U.S. legal sales are on track to exceed $72 billion a year by 2030. Frankly, I think that’s a conservative estimate.

Proposed legislation in Congress to legalize marijuana on the federal level stands a good chance of passage next year, especially if Democrats retain control of both chambers. And when the federal ban on pot is lifted, the investment floodgates will open.

The economic calendar…

Here are the salient economic reports scheduled for release this week: industrial production and home builders’ indices (Tuesday); building permits, housing starts, and Beige book (Wednesday); initial jobless claims, existing home sales, and leading economic indicators (Thursday); and indices of common inflation expectations (Friday).

Editor’s Note: To discuss a wide range of investment opportunities related to the booming marijuana industry, I’m holding a special Town Hall on November 1. Be on the lookout for an invitation in the coming days!

John Persinos is the editorial director of Investing Daily.

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