A Look at the Nine Bear Markets Since 1950

February 11, 2008

The February 18, 2008 issue of Fortune focuses on the current market conditions. On pages 50 and 51, there’s a graph along with some stats on the nine bear markets that have occured since 1950 (using the S&P 500 Index as their gauge). Unfortunately, there’s no link to the graph so I did the next best thing and put together an Excel spreadsheet with the bear market information:

The Bear Markets Since 1950

NOTE: I got the bear market dates from the Fortune article but I looked up the index prices on those dates and ran the calculations myself.

According to Fortune, the longest bear market since 1950 was the one that ran from March 24, 2000 through October 9, 2002. That was a 929 day bear market. I had no idea it lasted that long! I definitely felt the drop in the market after the internet bubble burst but the decline didn’t seem that bad to me. It could have been muted by the fact that my wife and I were investing on a regular basis through her 401(k).

Anyway, I wouldn’t let the talk of a bear market scare you. The worst thing you can do is to try to time it. Chances are, if you try to time it, you’re emotions will take control and we all know what can happen when the heart rules the mind.

One response to A Look at the Nine Bear Markets Since 1950

  1. Interestingly that they start at 1957 and not at 1929. Another interesting thing would be to see how long it takes for the market to get back to where it was before the drop. For those who loose money on the drop, the period it takes to get their money back is more important than how soon the market starts going up again.

    One thing that surprised me was that the drop in 2000-2002 was greater than in 1987. The 1987 felt like a bigger drop to me, but maybe it was because most of it happened in one day. In terms of absolute numbers I lost a whole lot less in 1987 then in 2002, but since I had didn’t have that much money then, I felt it more. Also in 1987 I lost principal whereas in 2000-2002 I lost mostly gains (and for the most part because of my own greed: I play with some individual stocks outside of 401K and while I’ve been lucky at picking good stocks, I get greedy and hold on way too long).