Charlie Bilello has compiled a fascinating table listing all bear markets in the US over the last 100 years. It covers the duration of each bear market, the length of accompanying recessions, the S&P 500 levels at the start and end, and the percentage decline during each period. Some of the most severe crashes stand out, such as the Great Depression in 1929, where the index lost a staggering 86%. Other major downturns include the 1932-33 crash (-40%), the 1937-38 collapse (-54%), the 1973-74 recession (-49.9%), the dot-com crash (-50%), the 2008 Global Financial Crisis (-57%), and the more recent COVID crash (-35%).
Bear Market Durations and Recovery Trends
On average, bear markets have lasted about 11 months. If a recession accompanied them, the average duration extended to 16 months. This means that historically, the pain period in the market has been just over a year. Despite such frequent drawdowns, the S&P 500 has continued to deliver exceptional returns over the past century, averaging near double-digit growth in dollar terms. The key takeaway here is that, even with significant corrections along the way, the broader market has consistently moved upward in the long run.
Perspective on Current Market Conditions
Right now, if the market is down 10% or 20%, it may feel like a crisis, but in the grand scheme of things, this is a relatively minor dip. In fact, the US market has remained quite resilient, and even in the Indian market, while there are concerns, history suggests that markets built for long-term growth tend to recover and thrive. Every decade presents challenges, whether it be recessions, financial crises, or global uncertainties, yet the market finds a way to move forward.
The Importance of Long-Term Investing
These bear markets serve as a test of an investor’s patience and resilience. If one can endure short-term volatility and remain invested, the benefits of long-term compounding become evident. Periods of turbulence, whether lasting one year or more, should not deter investment. Instead, they often provide opportunities to accumulate assets at lower valuations. Those who stay disciplined and continue investing even through downturns tend to see significant gains over time.
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