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HOW BEAR MARKETS END

Tech Ticker and Dshort.com were out with some nice charts and stats on the way markets bottom.

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  • The 10 bear markets since 1950 have bottomed down 20% to 57% (current) off the peak. The current bear is by far the worst since the Great Crash, which bottomed down 89%.
  • The bear phases of these markets lasted from 3 – 30 months (we’re currently in month 17). The drop from 1929-1932 was also about 30 months.
  • Most of these markets offered some sort of “retest” of the low. Importantly, however, some did not.  (As always, beware confident “technical” analysts)
  • As this additional chart from Doug shows, the S&P is now trading about in-line with its long-term price trend after 15 years of trading above it. So even if we have put in the bear-market bottom, it is likely that the S&P will eventually trade below trend for a considerable period of time.
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