By Debra Taylor, CPA/PFS, JD, CDFA™
The S&P 500 is in a bear market, after closing on Monday, June 13th, with a greater than 20% decline from its recent peak. A look back at past bear markets shows that there is good news and bad news once the large-cap index has crossed that symbolic threshold.
Since 1929, the S&P has experienced more than two dozen bear markets. This time, it has been a quicker-than-average descent into bear territory, at 111 trading days since the Index’s January 3 record high, according to Dow Jones Market Data.
The median bear market peak-to-trough decline for the S&P has been almost 28%, with the average bear markets lasting about ten months, on average.
What may be even more important, longer-term returns for the S&P after falling into a bear market are positive. Since 1950, the Index has been higher 75% of the time, three months after falling into a bear market. It has also been positive 75% of the time a year later, with a median gain of 26%. Patience is definitely rewarded when the market turns bearish.
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