June 28, 2022
A review of the past 11 bear markets
The 11 bear markets since World War II have averaged 16 months in duration
After peaking on January 3, 2022, the S&P 500 Index dropped to bear market levels on June 13 when it closed at 3,750, down 21.8% from its peak of 4,797. This marks the 12th bear market since World War II, and it means that we are already more than five months into the current bear market.
The average bear market has lasted 16 months, although bear markets accompanied by a recession have averaged closer to 20 months. While the average S&P 500 Index decline for a bear market has been 35.1%, the index has risen 43.4% on average in the 12 months following the end of a bear market. It has taken the S&P 500 Index an average of about 24 months to return to its prior peak.
What it may mean for investors
The S&P 500 Index remains in a downtrend, and we believe the technical damage in markets to date likely will take time to repair. It may be tempting to try and take advantage of recent weakness, but while we expect additional entry points in coming months, for now we favor patience before committing new cash to equities. With the Federal Reserve just beginning the tightening cycle, we have shifted our investment preferences away from economically sensitive assets and toward more quality-oriented and defensive assets.
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