Financial FitnessGeneral Information

What is a Bear Market?

By March 21, 2019 No Comments

In the fourth quarter of last year, from the peak of the market in September to the bottom of the market on December 24th, the overall stock market according to Yahoo Finance dropped 19.8%, almost triggering a bear market.

What is a Bear Market?

According to Investopedia, a bear market is a condition in which security prices fall 20% or more from their recent highs.  A correction, on the other hand, according to Investopedia, is generally defined as a 10% or greater decline in the price of securities from its peak.

How many Bear Markets have we seen?

If we look back to 1928, the S&P 500 has experienced 301 dips of 5% or more.  They’ve had a total of 95 corrections of 10% or more, 43 severe corrections of 15% or more.  And then there was a total of 25 bear markets where the market dropped 20 percentage points or more.  Since World War II, 1945, the S&P has suffered three bear markets that sustained losses of at least 40%.  Those were the 48% drop from 1973 to 1974; the 49% drop in 2000 to 2002; and the most recent is the 57% drop from 2007 through 2009.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly. 

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.