Since the stock market bottomed out back in March, it has been on a (mostly) steady climb back up, notwithstanding last week‘s declines. How quickly the crash (ie bear) became a boom (ie bull). Strange and interesting times indeed.
Apparently this trend of immense growth following bear markets is pretty normal (even if it usually doesn’t turn around as quickly as it did this year!). I just re-read Tony Robbins’ and Peter Mallouk’s “Unshakeable,” which is essentially a more concise version of Robbins’ “Money: Master the Game.” In “Unshakeable,” the authors at one point list recent bear markets from 1947 through 2009 (pictured above), the number of days each bear market lasted, and the total decline of the S&P 500 during the bear market. I typed out their table and added info about the March 2020 bear market:
| Years | Numbers of Days In Length | % Decline in S&P 500 |
| 1946-7 | 353 | -23.2% |
| 1956-7 | 564 | -19.4% |
| 1961-2 | 195 | -27.1% |
| 1966 | 240 | -25.2% |
| 1968-70 | 543 | -35.9% |
| 1973-4 | 694 | -45.1% |
| 1976-8 | 525 | -26.9% |
| 1981-2 | 472 | -24.1% |
| 1987 | 101 | -33.5% |
| 1990 | 87 | -21.2% |
| 1998 | 45 | -19.3% |
| 2000-1 | 546 | -36.8% |
| 2002 | 200 | -32% |
| 2007-9 | 515 | -57.6% |
| 2020* | 35* | -34%* |
Obviously, there were significant drops during each of these periods. The drama lasted over and year and a half in six instances! But hang in there. The authors show how market performed in the 12 months after the bottom was reached (I re-typed it here also with 2020 data added):
| Bear Market Bottom | Next 12 Months (S&P 500) |
| June 13, 1949 | 42.07% |
| October 22, 1957 | 31.02% |
| June 26, 1962 | 32.66% |
| May 26, 1970 | 43.73% |
| October 3, 1974 | 37.96% |
| August 1, 1982 | 59.40% |
| December 4, 1987 | 22.40% |
| September 21, 2001 | 33.73% |
| July 23, 2002 | 17.94% |
| March 9, 2009 | 69.49% |
| March 23, 2020** | 44.5%** (as of 11/2/20) |
No matter the duration or depth of the bear market, the year following it showed impressive growth! As Robbins writes,
As I write this in late 2016, the S&P 500 has risen by an astonishing 266% since its low point in March 2009.
You might think this was a freak occurrence. But as you can see on the chart above, the pattern of bear markets suddenly giving way to bull markets has repeated itself again and again in American over the last 75 years.
Now can you see why Warren Buffett says he likes to be greedy when others are fearful?
“Unshakeable,” pp.39-40
This is just as true this year. Since the market low back on March 23rd, the S&P has so far grown 44.5%!** That’s impressive.
To me, this offers reassurance to hang in there no matter what is going on in the market. It reinforces the point William Bernstein made in his book “The Four Pillars of Investing“: when stocks are down, their futures (ie returns) look a lot brighter.
I guess the harder they fall, the more they (tend to) climb back up!
*I cobbled together the data for 2020 by Googling “how far did the S&P fall in 2020,” where I found that the 2020 bear market is considered to have started February 19th, and to have lasted until March 23rd, where the market had fallen 34%.
**This is based on me comparing the S&P’s March 23rd close of 2290.71 to today (November 2nd)’s close of 3310.24, on Yahoo Finance.