We hear many clients tell us they believe the stock market is over-priced and ready for a correction. We don’t engage in trying to guess the future and we usually tell clients to stick to their investment plan. However, the persistent question got me to thinking how often to bear markets (a downside move of at least 20%) occur. I found some interesting facts.
According to Kiplinger magazine, bear markets occur once every 56 months (four years and eight month). How long does a bear market last? 21 month is the average. How many have occurred since 1929 (which was the mother of all bear markets)? 26 is the answer.
The latest bear market started in March 2020 as you may recall. Before that, the bear market brought on by the Great Recession of 2007-2009 saw stocks drop in value over 50% and it lasted 27 months.
Of course, bull markets (defined as a gain of 20% or more) often follow bear markets. As in the most recent case, the S&P 500 index has gained approximately 45% in the last year.
Just some interesting facts to keep in mind the next time someone tells you a bear market might be coming.