No need for radical asset mix adjustment The lesson learnt after the roller-coaster ride of the past six weeks is that even in bull markets, equity prices do not move straight up any more than they move straight down in bear markets. It also serves as a reminder that when valuations get as much as one standard deviation away from the norm - as they did heading into the most recent corrective phase - the market becomes susceptible to any adverse news since by definition all the good news, and then some, is already priced in. But the real abnormality was having gone as long as we did without a meaningful pullback, which is a normal part of the market cycle. Corrections are part and parcel of the investment process and it is imperative to realise that what is most important for building wealth is not "timing" the market but "time in" the market. This does not mean some cash should not be raised and risk taken off the table, but one has to stay engaged, because it is likely that what we saw unfold of late is only a near-term reversal in what is still an overall uptrend. In fact, looking at the big picture, the swoon we saw from the mid-September highs was the 15th correction over this near six-year bull market, in which the Dow Jones Industrial Average lost a cumulative 50,000 points. And yet, even with these combined intermittent losses, the markets have still managed to nearly triple. Because fear is a much more powerful emotion than greed, we tend to forget about up-point days that swamp the down-point days in what has been a fundamental bull market even with the transition from quantitative easing, euro area stagnation and deflation, a structural slowdown in China, and the Ebola and Isis scares. If there is some benefit from having this correction occur, even as corporate earnings have been for the most part surprising to the high side, it is that valuations are no longer extreme, with forward price-to-earnings multiples closing back in on an average-like 15 times for the S&P 500. Sentiment in most of the surveys is no longer overly exuberant, so the complacency has faded, too. Credit spreads have begun to narrow again and the relative strength of small-cap stocks, typically a leading indicator for the overall market, seems to have bottomed as well. But fundamental bear markets do not just pop out of the air. They are caused by tight money, recessions, or both. While the Federal Reserve is done with QE for the first time in more than five years, the money market has pushed back its expectation of the first rate increase out to 2016. That is good news since it is aggressive rate increases, not the end of unconventional monetary policies, that create the conditions for the end of a bull market. While QE is gone, what remains is the Fed reference to "considerable time" regarding this much larger issue of rate increases. Second, our internal recession-odds monitor is still near zero and is pointing toward accelerating growth in the US. While this is no panacea for the structural impediments to growth in the euro area and Japan, it will serve to provide an underpinning to exporters in those regions. What has to be said about the US economy, in particular, is that, just as was the case during the spreading Asian crisis of 1997-98 when a third of the global economy went into an outright depression, the US has emerged as a bastion of global prosperity and stability. The US economy is 90 per cent domestic and a powerful machine that requires a massive shock to reverse. The US, by inheriting lower bond yields, now has 30-year mortgage rates below 4 per cent for the first time this year. Opec is tripping over itself to boost market share. So the slide in oil prices may be bad news for the Dakotas and Alberta, but car drivers are smiling with this de facto tax cut worth $50bn at an annual rate arriving just in time for the most important time of the year for retailers. For now, the plunge in raw material costs is awful news for producers in the resource sector but acts as a huge source of margin expansion for practically everyone else. And so, when it comes to the US dollar, I do not look at it as a source of concern as much as a signal as to how the foreign exchange market is separating the wheat from the chaff in the global growth sweepstakes. And, since bear phases only appear when the markets correctly anticipate recession, rest assured that pullbacks such as the one in September and part of October will serve as corrections, as opposed to anything more nefarious that would require a radical shift to the asset mix. David Rosenberg is chief economist and strategist at Gluskin Sheff