Why this is not a bear market despite a brutal October

OCTOBER'S sharp equity selldown has raised fears about whether this marks the beginning of a bear market, as defined by a fall of more than 20 per cent from peak to trough. US and world stock indices fell close to 10 per cent within the month.

Market participants are beginning to draw comparisons with 1987's "Black Monday" due to several similarities. First, both were October events. Second, the current selling has in part been attributed to algorithm models, not unlike the programme-selling that arose from portfolio insurance hedging in 1987.

To stretch the argument further, some have also likened the latest selloff in technology stocks to the "dot-com" bubble crash around 2000. Given these comparisons made with past bear markets, we conducted two sanity checks.