10 Things You Should Know About Bear Markets

Watch for 20%: Market cycles are measured from peak to trough, so a stock index officially reaches bear territory when the closing price drops at least 20% from its most recent high (whereas a correction is a drop of 10%-19.9%).

Stocks lose 36% on average in a bear market.1 By contrast, stocks gain 114% on average during a bull market.

Bear markets are normal. There have been 26 bear markets in the S&P 500 Index since 1928.

Bear markets tend to be short-lived. The average length of a bear market is 289 days or about 9.6 months.  That’s significantly shorter than the average length of a bull market, which is 991 days or 2.7 years.

Every 3.6 years: That’s the long-term average frequency between bear markets. Though many consider the bull market that ended in 2020 to be the longest on record, the bull that ran from December 1987 until the dot-com crash in March 2000 is technically the longest.

Between 1928 and 1945 there were 12 bear markets, or one about every 1.4 years. Since 1945, there have been 14—one about every 5.4 years.

Another 34% of the market’s best days took place in the first two months of a bull market—before it was clear a bull market had begun.2 In other words, the best way to weather a downturn could be to stay invested since it’s difficult to time the market’s recovery.

There have been 26 bear markets since 1929, but only 15 recessions during that time.3 Bear markets often go hand in hand with a slowing economy, but a declining market doesn’t necessarily mean a recession is looming.

Assuming a 50-year investment horizon, you can expect to live through about 14 bear markets, give or take.

Bear markets can be painful, but overall, markets are positive a majority of the time. Of the last 92 years of market history, bear markets have comprised only about 20.6 of those years. Put another way, stocks have been on the rising 78% of the time.