Originally Posted On: https://hilltopwealthsolutions.com/10-important-facts-about-the-end-of-the-bull-market/
As an investor, experiencing the effects of the investment cycle, including bear markets is a fact of life. While downturns can understandably cause concern, it’s important to remember that bear markets are a normal part of the investment cycle and the stock market has recovered from every past correction and recession.
We understand that this is a challenging time, but we hope this will answer any questions you might have surrounding historical bear market trends.
Markets are measured by highs and lows, so when indices drop 20% (or more) from their high, that’s am bear market. A bull market is simply the opposite, a gain of 20% from its low-water mark.
On the reverse, stocks have gained over 110% (on average) during a bull market.1
There have been about 25 bear markets in the S&P since 1928. Conversely, there have been 26 bull markets over that same span. Over the long-term, stocks have risen.2
The typical duration of a bear market is about 300 days. That’s around 10 months. That means bear markets are usually shorter than bull markets, which average 2.75 years.
That is how long we typically go between bear markets.
From about 1928 until 1945, we had 12 20% or greater downturns. In the 75 years since WWII ended, there have only been 13.
Almost one-third of the markets most bullish days took place at or near the beginning of that bull market. (Long before most people even realized that a 20% upswing was in motion.)3
They are not the same. In the last 90 years, there have been almost twice as many bear markets as recessions (25/14). (The message here is that downturns in the market don’t always signal a recession.)4
A proper asset allocation is important for investors to feel comfortable weathering the ups and downs of the market.
In the last 9 decades, we’ve had bear markets for just under 21 years. That means that stocks were moving up more than 75% of the time.
1: Source for bear/bull market stats is Ned Davis Research as of 12/31/19 unless otherwise noted.
2: The S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.
3: Source: Ned Davis Research, 2/20. Time period referenced is 1/3/2000-12/31/2019.
4: Source: National Bureau of Economic Research, 1/20
5: Source: Ned Davis Research, 1/20. Past performance does not guarantee future results. Investors cannot directly invest in an index.
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