3 Things To Know About Bear Markets

A little over a week ago, the stock market slipped into bear market territory. It’s the first official bear since 2009, though 2018 was very close. Today, we’ll share 3 things to know about Bear Markets. (Read More Below)

Watch Now: 3 Things To Know About Bear Markets

Listen Now:
3 Things to Know About Bear Markets

Subscribe Where You Find Your Podcasts

The US Stock market is now reeling from the potential impact of the Covid-19 virus. After hitting a high on February 19th, the stock market basically went into a power dive. On March 16th the S&P 500 closed nearly 30% lower than the previous all-time high.  It is the fastest we have ever reached a bear market since—Just 22 total days.

Taking a step back and looking at the big picture, can help us make better decisions. Today, we are going to look at  3 things you need to know about bear markets. 

1. They are a normal part of the stock market

3 Things To Know About Bear Markets
Click to Enlarge

Since the end of World War 2, we have now seen 14 bear markets or very near bear markets. Some have been declines of just 20%. On now 6 occasions, they tested the minus 30% range. Three of those tested the minus 50% range. The average decrease is 31.5% The worst one, during the great recession, was -57%.

On average they happen about every five years, so it should be no surprise when we go through one. Although it doesn’t make it any more pleasant.

Schedule a Call with a CFP

How is the bear market affecting you? Before you make any major decisions, talk to a financial planner.

2. Every bear market looks different

Some bear markets are long and drawn out, like the one we saw in 2000-2002. It took over 87 months to go from market high, to bottom, back to a new high.

Some bear markets happen in the blink of an eye. The complete cycle in 1998 lasted a little over 4 months.

What will this one be like? Nobody knows. We don’t even know if we’ve hit bottom yet. And like each of the previous 13, we won’t know that until its over.

blank
Click To Enlarge

Don’t Miss An Episode

Get every episode of Monday Morning Money in your inbox.  Join our mailing list.

3. Every bear market has recovered

Bear Market 3 Things
Click to enlarge

It didn’t matter how far the market dropped. And, it didn’t matter why it dropped or how quickly it fell. In every case, stocks completely recovered and went on to set new high’s and create new wealth.

Consider this, on December 31, 1945, the S&P index closed at 17.45. On March 12th, when we first entered bear market territory, the S&P 500 closed at 2,480.  Prices are 142 times greater now than they were 74 years ago!

The average annual total return over those past 74 years, has been 10.6% per year (through March 16, 2020)

blank
Click To Enlarge

Schedule a Call with a CFP

How is the bear market affecting you? Before you make any major decisions, talk to a financial planner.

Schedule A Call With A Certified Financial Planner™

 

Don’t Miss An Episode

Get every episode of Monday Morning Money in your inbox.  Join our mailing list.

Subscribe Where You Find Your Podcasts

Follow us on Social Media

Financial Planning

About the Author

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors.   This is fifth time he has gone through a bear market. Unfortunately it probably won’t be the last.

Our Most Recent Videos And Posts