We are now in the 10th official bear market since 1950. Here are some quick stats & notes on the previous 9

by bigbear0083

I just stumbled across this during my weekend reads this afternoon and just thought it was worth sharing with all of you guys in here as well.

Listed below are the max. % pullback on each respective bear markets; bear market start; bear market bottom; recovery back to new highs; and finally the catalyst for the bear market.

I hope you all enjoy this little read through of the previous U.S. bear markets!


The Bear Market of 1956-1957:

Max. Pullback: -21.5%

Start: August 6th, 1956

Bottom: October 22th 1957.

Recovery: Septemer 24th, 1958 (15 months to bottom; 11 months for recovery)

Catalyst: The “Eisenhower Recession” of 1957-’58 that lasted 8 months.


The Bear Market of 1961-1962:

Max. Pullback: -28%

Start: December 13th, 1961

Bottom: June 26th, 1962

Recovery: September 3rd, 1963 (7 months to bottom; 14 months for recovery)

Catalyst: Flash Crash of 1961-’62: The “Kennedy Slide”. Market came close to the bottom again during the Cuban Missile Crisis in Oct 1962.


The Bear Market of 1966:

Max. Pullback: -22.2%

Start: February 10th, 1966

Bottom: October 7th, 1966

Recovery: May 4th, 1967 (8 months to bottom; 7 months for recovery)

Catalyst: Financial Crisis/Credit Crunch of 1966.


The Bear Market of 1968-1970:

Max. Pullback: -36.1%

Start: December 2nd, 1968

Bottom: May 26th, 1970

Recovery: March 6th, 1972 (18 months to bottom; 22 months for recovery)

Catalyst: 1969-’70 Recession – a “mild one” that lasted 11 months.


The Bear Market of 1973-1974:

Max. Pullback: -48.2%

Start: January 12th, 1973

Bottom: October 3rd, 1974

Recovery: July 17th, 1980 (21 months to bottom; 70 months for recovery)

Catalyst: Oil crisis of 1973, 1973-’75 recession that lasted 17 months, stagflation (high unemployment & high inflation).


The Bear Market of 1980-1982:

Max. Pullback: -27.1%

Start: November 21st 1980

Bottom: August 12th, 1982

Recovery: November 3rd, 1982 (21 months to bottom; 3 months for recovery)

Catalyst: Volcker tightening and 1981-’82 recession that lasted 18 months. Recession ended in 1982, as bear market recovered to prior peak.


The Bear Market of 1987:

Max. Pullback: -33.5%

Start: August 26th, 1987

Bottom: December 4th, 1987

Recovery: July 26th, 1989 (3 months to bottom; 20 months for recovery)

Catalyst: Black Monday (Oct 19), but bottom was only in Dec. Recovery surprisingly long but Fed made a series of rate hikes in 1988 to fight inflation.


The Bear Market of 2000-2002:

Max. Pullback: -49.1%

Start: March 27th, 2000

Bottom: October 9th, 2002

Recovery: May 30th, 2007 (31 months to bottom – 56 months for recovery)

Catalyst: Dot-com crash, 2001 recession, 9/11.


The Bear Market of 2007-2009:

Max. Pullback: -56.8%

Start: October 10th 2007

Bottom: March 9th, 2009

Recovery: March 28th, 2013 (17 months to bottom; 49 months for recovery)

Catalyst: Housig bubble crash, Great Financial Crisis.


The Bear Market of 2020-?:

Max. Pullback: -26.7% (so far…)

Start: February 20th, 2020

Bottom: ?

Recovery: ?

Catalyst: COVID-19.


Conclusions:

Worse the drawdown, larger the gain required to hit prior peak.

  • -20% -> +25% to recover
  • -25% -> +33%
  • -30% -> +43%
  • -35% -> +54%
  • -50% -> +100%
  • -60% -> +150%

In other words, deeper the drawdown, longer the recovery. (eg, 1973-’74, 2000-’02, 2007-’09)


Last but not least:

Since 1950-

Fastest crash: 1987 bear market (3 months)

Fastest recovery: 1980-1982 bear market (3 months)

6 out of 9 bear markets came amid recessions.

3 of the worst bear markets came amid deep recessions (1973-’74, 2000-’02, 2007-’09).


Apologies for this long post! Thanks for taking the time to read this. 😛

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Have a great rest of your Sunday everyone! And best of luck to all on the new trading week ahead.

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