How Long Do Bear Markets Normally Last?
With U.S. stocks now officially in bear market territory following an ongoing slump in the S&P 500, many investors might be wondering how long the current bear market will last.
In truth, it’s impossible to predict given the many factors that go into creating and sustaining a bear market — including economic trends, interest rates, sociopolitical events and the general mood of investors.
However, you can make an educated guess based on precedent — specifically, the average life span of previous bear markets. But even that figure is up for debate.
According to Seeking Alpha, there have been 28 bear markets since 1928, with an average decline of 35.62%. The average length of time was 289 days, or roughly nine-and-a-half months. If the current bear market follows Seeking Alpha’s formula, it could last until March 2023 or so.
But that might be an optimistic take, based on other bear market formulas. ABC News reported this week that since World War II, bear markets on average have taken 13 months to go from peak to trough and 27 months to get back to breakeven. The S&P 500 index has fallen an average of 33% during bear markets over that time frame. The biggest market value decline since 1945 occurred in the 2007-2009 bear market, when the S&P 500 sank 57%.
Typically, the faster an index enters into a bear market, the shallower it tends to be, according to ABC News. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen into a bear market at a faster rate, the index has averaged a loss of 28%.
The current bear market traces its roots to early January 2022, when the S&P 500 began its 20% decline from its closing peak. That means it started roughly 190 days ago.
Meanwhile, CNBC reported that the average bear market lasts 359 days, or about 12 months. Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management, told CNBC that it can take a full 38 months to go from the bottom of a bear market to a new all-time high.
Seeking Alpha reported that longest-ever bear market occurred in 1973-74, when it lasted 630 days, or about 21 months. The shortest, at 33 days, occurred during the first quarter of 2020, in the early days of the COVID-19 pandemic.
But again, there’s disagreement on that metric as well. According to ABC News, the longest bear market lasted 61 months, cutting the index by 60% before it ended in March 1942.
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