Well, this observation can only be made if you're looking at a price weighted index versus a value weighted index, and that is the scientific explanation of downside bias in securities prices.
Lindq, this isn't a philosophical question or whimsical thing. The explanation lies in understanding the differences in value weighted and price weighted indexes. It is a topic in the CFA Curriculum.
Your one of those guys that when you have a conversation with you...I would just nod my head and pretend to know what you are saying...I would stand in the back of the group HeHe...not really your a nice guy. ES
Which part? Saying that the explanation has to do with "what goes around comes around" and not from price weighting and value weighting? Really?
First, the market tends to fall faster in a BULL MARKET and RISE FASTER in a BEAR MARKET. The reason why the market falls faster in a BULL MARKET is that it tends to be a reaction to UNKNOWN/UNEXPECTED data which causes a SHOCK or SURPRISE catching MANY PARTICIPANTS off guard. Likewise, the market rises FASTER in a BEAR MARKET due to the same types of shocks and that TOO MANY are WRONG SIDED on the market. It is also psychology.. people start to DIP their feet into the long side when they see prices starting to slowly rise and they start to feel safe again. whereas market falls are generally due to FORCED SELLS either by stop or by broker. By hook or by crook. Honestly, I don't know if any of this is true but sounds good.
Herd behaviour isn't always so symmetrical. It's not always going to lead to bear markets, but everything about this thread just shows how uneducated the masses are about our markets. This is due to price weighting. The observation not so much in stocks, but in index components.