What should you know?
We know that stock markets can be volatile, but when looking at nearly a century of bull and bear markets we can confidently conclude that the good times heavily outweigh the bad.
The chart below shows the ‘Bull’ and ‘Bear’ markets in the S&P 500 from January 1926 to June 2023:
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- Since 1926, the S&P 500 Index has experienced 18 bear markets (a fall of at least 20% from a previous peak). These declines had an average duration of approximately 10 months.
- Over the same period there were 19 bull markets (a gain of at least 20% from a previous low point). These bull markets had an average duration of 52 months, typically with advances far exceeding the decline that preceded them.
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Why should you care?
The brightest days follow the darkest nights. The cyclical nature of the economy means that bull and bear markets are an inevitable part of the investment journey. They cannot be prevented or accurately predicted.
Despite the stock market’s fluctuations, history shows us that equities have consistently rewarded disciplined investors, those who remained invested throughout all the market’s ups and downs.
