In every bear market, there's a period where investors throw in the towel for good and decide stocks just aren't for them. They've taken too many losses. All their hope is gone.
This is known as "capitulation," and we find it at the end of just about every bear market we've studied.
The word capitulate, in a general sense, means to cease to resist an unwelcome opponent. And bear markets tend to stick around until everyone has capitulated to an investor's opponent: fear.
As more investors throw in the towel, fear eventually reaches a crescendo. The calm-headed folks start to lose their cool, and (nearly) everyone sells in a final blast of panic selling.
Investors then spend a brief time convinced stocks will never recover again – just before they do.
A classic outline of the market cycle looks like this...
The part that few investors understand is that you want to buy when there's capitulation. With no sellers left, stocks can only go up...
We like to call this situation a "reversal window." It's when high volumes of selling suddenly shift to high volumes of buying.
We saw a reversal window after investors reached the capitulation stage following the dot-com bust. Stocks then went on to soar almost three times higher than the long-term S&P 500 Index average... in just about one year.
The gains after the 2008 financial catastrophe were even greater. After investors had given up all hope for the market in 2009, stocks went on to post gains that were six times higher than the market's long-term average.
Today, we may be at the start of another great reversal window.
We've seen such extreme bearishness over the past few months... Folks have been scared to death of stocks. We've heard stories from friends and colleagues who want to sit in cash for the next year or two until the economy is strong again.
This means now is the time to put your money to work.
I went on camera earlier this month to explain the one move that the wealthiest 1% are quietly making with their money right now. If you miss out on what's happening, it could impact your wealth for decades.
If you don't want to be left behind, click here for all the details.
Now, let's get into some of the things you've had on your minds this week. As always, keep sending your comments, questions, and topic suggestions to [email protected]. We read every e-mail.
Q: Hey Doc. Thoughts on the dangers of cooking with olive oil because of the low smoking point? – D.W.
A: The concern regarding smoking points is due to acrolein. Acrolein is a volatile molecule that is released by the burning of oils used in frying food. It's also released by burning gasoline, wood, plastic, and cigarettes. Acrolein not only irritates the lungs, but it can trigger asthma and cause other respiratory problems.
When we fry foods, most good cooks aim for a cooking temperature of around 356 degrees Fahrenheit (180 degrees Celsius). The idea is to avoid any other smells or odors from overheating the oils, which means avoiding burning or smoking the oil.
Of course, the smoke point is the temperature at which your oil starts sending up bluish smoke. The smoke is a breakdown of the fats in the oil into glycerol, which is then broken down further into our poisonous acrolein.
So the rule of thumb is to use oils that don't smoke until they reach higher temperatures, preventing the release of any acrolein. And, of course, the smoke points vary from oil to oil.
A study done at the University of Dayton measured the smoke points of four popular oils: coconut, safflower, canola, and extra virgin olive oil:
Coconut = 347F (175 C)
Extra Virgin Olive Oil = 383 F (195 C)
Safflower = 413.6 F (212 C)
Canola = 460.4 F (238 C)
We did find further research indicating that refined olive oil (not the extra virgin kind) can have a higher smoke point. Several sources confirm it's between about 440 F and 460 F.
That's as good as the canola some folks swear by.
Here's the other thing you really need to know about heating oils. In the Dayton study, the most interesting finding was that acrolein was formed in all four of the oils tested (coconut, safflower, canola, and extra virgin olive oil) when they were below the frying point of 356 F. That means acrolein forms at temperatures well below the smoke point.
And the researchers pointed out that the biggest concern with the formation of acrolein in the fumes from smoking is making sure to have proper ventilation.
So do what I do... Use extra virgin olive oil for dipping and cold uses like salad dressings. And then use refined olive oil (the light stuff) or a blend of the two for general cooking. Most of all, be sure to heat your pans up slowly and to have proper ventilation – run your oven exhaust and crack a window.
What We're Reading...
- Did you miss it? This is how you can gain an edge in the stock market.
- Something different: What is the carnivore diet?
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
March 31, 2023