The 2020 Bear Market

Here is where things stand with the 2020 bear market, as of March 26.

Bear market 2020
click to enlarge

Some facts

First let’s start with some facts.

  • Current all-time high for the S&P 500 – 3,386.15
  • Current bear market low: 2,237.40
  • Price decline: -33.9%

On the chart above, we put two extra lines. They or show where prices would have to reach to match the two worst bear markets since the 1930s. Those were the dot com bust (-49%) and the great recession (-57%).

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What we know

Fastest bear since World War II:  It took just 22 calendar days (16 trading days) to reach the -20% threshold.  It has also been the fastest pace to reach -30% ever.

A Steep Climb Ahead: Based on the current low point (2,237.40), stock prices will have to climb 51.3% to set a new all-time high.  

What we don't know

Was that the bottom? The current bottom was established on March 23rd.  But we won’t know if that was the “official” bottom for quite some time. 

How long it will take to erase the losses: Above, we mentioned prices would have to increase by more than 50% to set a new high.  Everyone would welcome a fast recovery.  But don’t be surprised if it takes longer than you would like. 

Watch: 3 Things To Know About Bear Markets

What can you do?

As difficult as things are right now, we can’t undo the damage.  Focus on what you can do to create the best outcome from here.

Sit Tight: One of the hardest things to do in times like this is to do nothing. But, we need to remember this is just at temporary thing.  

2020 Bear Market
click to enlarge

This chart shows the last 14 bear markets.  It also shows the bull markets that followed.  The bear market periods are both longer and stronger than the bulls.  (That’s why the S&P 500 has improved by over 10% per year since 1946).

Rebalance:  Your allocation to stocks is now lower than it was before this started.  You may want to rebalance your accounts.  This will adjust your allocation back to pre-bear levels. 

Watch: Should I Rebalance My Accounts

Increase your allocation to stocks:  Consider increasing your allocation to stocks.  Even if the market falls further, you’ll be in a better position when the recovery starts.

Talk to a financial planner:  If you are unsure about what to do, talk to a financial planner.  They can help you figure out the best path forward for you.  

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In this Free Guide, we…

  • Define A Bear Market
  • 3 things you should know about them.
  • 4 ideas you can use to improve your future.

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About the Author

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors. This is his 5th bear market event, and it won’t likely be his last.

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