This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.
Today AK Fallible, in his weekly show The One Thing with Real Vision, will explain what a bear market is.
First off, a bear market is defined as any market that falls 20% or more from its highs. So by that definition, most of the world’s stock markets are in or near bear market territory. But not the S&P… well actually with the markets moving this fast it might be by the time you’re seeing this… but technically we’ve been in a bull market for over 3200 days! But that’s honestly just semantics to anyone holding FANG or Financial stocks which are both down over 20% from their highs this year…
Now the average bear market happens every 3.5 years and usually lasts for 10-15 months. And since WW2, there have been 12 bear markets in the S&P 500. 9 of those have been just standard bears with average declines of 20 to 40% over 11 months. And then they took another 14 months to recover those losses, meaning that most investors were underwater in their accounts for a total of 2 years.
That’s just the average, but then there are some that are MUCH worse than your average bear. 3 of those 12 bear markets since WW2 were huge meltdowns with an average decline of 51%! These bad bears declined on average 23 months and then took 58 months to recover! That’s almost 7 years underwater!
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***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only, NOT INVESTMENT ADVICE.
