How long do bear markets take to recover?
As shown above, recovery times vary widely and depend on the economic environment. When bear markets are not accompanied by recession, recoveries from bear markets only took an average of 10 months to reach a new record high.
The bounce-back from the 2008 crash took five and a half years, but an additional half year to regain your purchasing power.
These charts of bear and bull markets in the S&P 500 since 1932 illustrate this well—there have 12 bear markets compared to 14 bull markets, but the duration of the bear markets is much, much shorter: The bear markets are just 25 months (around 2 years) long in average, compared to an average length of 59 months ( ...
The average bear market cuts stock prices by 36% from peak to trough and these declines typically last over a year and a half. And stock market recoveries are even longer, taking almost two and half years on average.
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
2000: Following a surge of investing and speculation in internet-related ventures during the 1990s, the Dot-Com Bubble burst in March 2000. The S&P 500 dropped nearly 50% and took seven years to recover.
As of now, the longest bear market occurred between 2000 and 2002 and lasted 929 calendar days. Image source: Getty Images.
The reverse of a bear market is a bull market, characterized by gains of 20% or more. While 20% is the threshold, bear markets often plummet much deeper than that over a sustained period.
Stocks lose 35% on average in a bear market.
On March 11, 2020, the Dow Jones Industrial Average (DJIA) entered a bear market for the first time in 11 years amid the economic impacts of the COVID-19 pandemic. 1 The Dow Jones Average fell from nearly 30,000 to under 19,000. The S&P 500 and the Nasdaq followed suit shortly after.
What is the longest time for the stock market to recover?
As shown in the table below, the recovery period for U.S. stocks has been as long as 15 years: In the wake of the 1929 Crash, the IA SBBI US Large Stock Index didn't fully recover until late 1944. For gold bugs, the longest recovery period spanned more than 26 years (from October 1980 until April 2007).
As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.
By 1933, nearly half of America's banks had failed, and unemployment was approaching 15 million people or 30 percent of the U.S. workforce. The Dow Jones Industrial Average would not return to its pre-1929 heights until November of 1954, about 25 years later.
Third, many Wall Street analysts predict that the S&P 500 will jump in 2024, but with a lower return than last year. Sure, they're guessing, just as I am. However, they think that moderating inflation and the potential for interest rate cuts should be good for stocks.
For now at least, analysts are anticipating S&P 500 earnings growth will continue to accelerate in the first half of 2024. Analysts project S&P 500 earnings will grow 3.9% year-over-year in the first quarter and another 9% in the second quarter.
Stock Market Forecast 2024: Wall Street Price Targets
Growth is expected to improve in 2024. Analysts are calling for year-over-year earnings growth of 11.5%, Butters says.
Experts with the Motley Fool suggest allocating an even higher percentage to stocks until at least age 50 since 50-year-olds still have more than a decade until retirement to ride out any market volatility.
Buffett has said that he's advised his wife to invest all her money in the S&P 500 after his death. It's simple to calculate how much money you'd have today if you did just that 20 years ago with $10,000. The total would be more than $65,000, which implies a return of 555%.
$10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.
Bear Market Period | Duration | Total S&P 500 Decline |
---|---|---|
January 1973 to October 1974 | 21 months | -48% |
November 1980 to August 1982 | 21 months | -27% |
August 1987 to December 1987 | 4 months | -34% |
July 1990 to October 1990 | 3 months | -20% |
How long did the 2008 bear market last?
One year and three months. The total length of time that the bear market of 2007 to 2009 lasted. The S&P 500 lost 51.9% of its value. 15 While this event can't be considered a true stock market crash, it's still worth noting based on the steep losses.
- The Crash of 1929, which eventually ushered in the Great Depression,
- The Oil Embargo of 1973, which was followed by a vicious bout of stagflation,
- The Tech Bubble crash and,
- The Financial Crisis following the (then) record high in October 2007.
It defines a bear market as a decline of at least 20% in the S&P 500 from its previous peak. It ends when the index reaches its low before then going on to set a new high. S&P uses closing prices for its calculations. Bull markets in both stocks and bonds are far more common than bear markets.
There are a few ways you can try to profit from a bear market. Dollar cost averaging: This strategy takes advantage of falling prices by investing equal amounts at regular intervals. This seeks to reduce your average buy-in amount. Bargain hunting: Even blue chip stocks may take a hit in bear markets.
- Short-selling.
- Dealing short ETFs.
- Trading safe-haven assets.
- Trading currencies.
- Going long on defensive stocks.
- Choosing high-yielding dividend shares.
- Trading options.
- Buying at the bottom.
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