How Long Do Bear Markets Last?

Bear markets, defined arsenic a 20% oregon much pullback from caller highs, typically past for an mean of betwixt 9 and 15 months. They are an inevitable signifier of marketplace cycles that determination from enlargement to contraction and vice versa. However, these downturns yet end, and the marketplace climbs higher successful the agelong run. Checking information from Yardeni Research, since and including the marketplace clang that sparked the Great Depression, the S&P 500 scale has had 22 carnivore markets, adjacent arsenic those invested semipermanent person had affirmative returns implicit time.

Still, a bear market tin origin important short-term losses for investors. Understanding however agelong they typically past and what influences their magnitude tin assistance you support position erstwhile there's marketplace tumult.

Average Duration of Bear Markets

Working with information from Yardeni Research, we get an mean duration of astir 11.4 months since 1928 for carnivore markets successful the S&P 500 index, with a afloat betterment (back to the erstwhile peak) typically astir 2.5 years.

The information tin assistance you enactment calm portion others panic, though a batch depends connected wherever you person your investments. For example, the Nasdaq 100, an scale of the 100 astir invaluable stocks connected that exchange, which tends to beryllium tech-heavy, took more than 15 years to travel backmost to its erstwhile highest aft the dot-com bust.

Factors Influencing Bear Market Duration

There are 3 main categories of carnivore markets:

Event-Driven Bear Markets

Economic shocks and unexpected events, specified arsenic pandemics and geopolitical conflicts, tin origin event-driven carnivore markets. The aboriginal 2020 downturn triggered by the pandemic serves arsenic a premier example. Despite a accelerated and steep diminution of implicit 30%, this carnivore marketplace lasted lone astir 1 period due to the fact that of swift and coordinated argumentation responses that restored investor confidence.

Cyclical Bear Markets

Cyclical carnivore markets hap successful tandem with broader economical slowdowns oregon recessions. These often past longer, arsenic tin beryllium seen successful the array below, due to the fact that they make from persistent macroeconomic issues, specified arsenic expanding involvement rates, unemployment, and falling firm earnings.

Structural Bear Markets

Bear markets whitethorn besides make erstwhile cardinal shifts oregon imbalances hap aft speculative bubbles burst oregon fiscal crises instrumentality place. Also known arsenic "secular" carnivore markets, these tin spot drastic drops of much than 50% and necessitate a longer betterment lasting years oregon adjacent decades (e.g., Japan from the 1990s done the 2000s), arsenic the system recalibrates to the caller reality.

Historical Extremes: Shortest vs. Longest U.S. Bear Markets

While the averages supply a utile guide, it's besides adjuvant to cognize however abbreviated oregon agelong they person lasted:

The Shortest Bear Market

The carnivore marketplace of March 2020, astatine the onset of the pandemic, is the shortest connected record. The S&P 500 plunged much than 30% successful conscionable 33 trading days earlier rallying to caller highs wrong 4 months. This accelerated betterment was mostly owed to unprecedented fiscal stimulus and monetary argumentation support, on with investors’ tendency to rapidly reenter the marketplace aft specified a steep decline.

The Longest Bear Market

Determining which is the longest U.S. carnivore marketplace depends connected the method used. Looking astatine aggregate indexes, researchers person identified a 61-month play (about 5 years) ending March 1942 arsenic the longest. The 60% marketplace diminution was sparked by the economical and geopolitical disruptions of World War II.

Other metrics constituent to the 1929–1932 downturn of the Great Depression, which lasted 33 to 48 months (again, depending connected methodology). This play saw the Dow suffer up to 89% of its worth earlier returning to dependable gains. The S&P index's longest carnivore marketplace came aft the dot-com bubble burst.

The Bottom Line

Bear markets typically past a small little than a year, but the duration and betterment clip beryllium connected the origin of the diminution and underlying fundamentals. While downturns tin beryllium achy for investors, they bash yet end, and the banal marketplace returns to a semipermanent maturation trend.