Even though it’s only mid-winter, the bears have come out of hibernation and are playing havoc with North American stock markets.

There are a number of technical indicators that can tell investors when exactly a bear market starts — but the clearest indicator is water-cooler talk. When was the last time you and your colleagues and friends talked about how great you were all doing in the market? About six months ago?

Fortunately for many of us in Calgary, the oil and gas sector has performed well, but the broader market has been struggling. The DOW and S&P have been in negative territory for almost a year and a half and the TSE has been essentially flat for the year and down 25 per cent from its highs.

I don’t think I have to even mention the Nasdaq. For many, the bear market started in March of this year, but the broader markets started their declines in January.

This means that we have already been in a bear market for an entire year. Now that your spirits are fully deflated, consider that, historically, most bear markets have lasted only 12 to 18 months.

Markets are a lot like skiing. It takes longer to get to the top of the mountain than it does to get down. If history repeats itself, we are much closer to the end of this market turmoil than the beginning. That does not mean more declines are not in store, but there should be fewer of them.

Many professional and individual investors do not realize they are in a bear market until it is well under way. It is partly human nature — we do not want to believe bad news until it hits us over the head.

It is the same way on the upside. The market is likely to have made a significant up move before you or I figure out that the bear market is over.

So what does this mean for an investor? First, the long-term pattern of the stock market is positive. Throughout many market downturns, one thing has held true — the markets come back to reach new highs.

Second, since none of us has the power of foresight, investors should stay fully invested at all times with their eye on the long-term trend. That is great advice for the long run, but it can be difficult to live through tough markets.

The best advice for investors over the short run is to hedge your bets. Although I believe we are likely through most of the downturn, there is still a high probability of further weakness.

Therefore, investors should balance their portfolio between conservative investments like banks, utilities and “sin stocks” (tobacco, alcohol, waste management) and cyclical investments like retailers, transportation and industrials.

If we may be near the end of the bear market, why be conservative now? Recoveries take longer to play out than declines (it takes longer to get to the top of the mountain than to get down) and it is prudent to err on the side of caution when choosing investments.

After all, we wouldn’t want to fall off the chairlift.

(Evan Spiropoulos is a portfolio manager of the Norrep Fund, a public small-cap fund managed by Hesperian Capital Management.)