Saga of Financial Markets


Last updateSat, 29 Jul 2017 12am

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What you should know about bear Markets

A bear market is a downturn of 20% or more, lasting at least 60 days, in any broad equity index such as the Dow Jones Industrial Average, the S&P 500, or the Nasdaq.  It is triggered when investors lose faith in the market as a whole - decreasing the demand for stocks. If the 20% plus downturn lasts less than two months, it's considered a correction instead of a bear market.

Further to that, here are additional points that you might want to know about bear markets:

  1. Since 1929, the US stock market has experienced 25 bear markets, an average of 1 every 3.4 years.
  2. Those 25 bear markets, on average lasted for 10 months; 25 bull markets lasted an average of 31 months.
  3. The average bear market loss was 35%.  The smallest loss was 21% in 1949; the worst was a drop of 62% from November 1931 to June 1932.  Whereas, the average of the 25 bull markets is 107%.
  4. The two recent bear markets are: From 2000 to 2002, bear market loss 58%; from 2007-2009, the plunge was 57%.  The largest bull was 582% from 1987 to 2000; the smallest bull market gain was 21%.

Reference, Paul Merriman, 2015-08-24, "22 things you should know about bear markets"