Is the Bear Market Over?

How Long Do Bull And Bear Markets Last?

 

One of the biggest fears that investors have is wondering when the inevitable  bear market will arrive. Many investors tend to get nervous as a bull market extends into its sixth, seventh or eighth year, thinking that it is due for a crash. Here’s a look at the average time of a bull and a bear market, as well as how you can handle your portfolio in any market condition. 

 

Bull Markets

The first thing that should be noted is that the stock market tends to spend most of its time in a bull market. A bull market is defined as a 20% rise in stocks after two 20% declines. 

 

Since 1968, we have seen eight bull markets. During that time, the shortest bull market was 3.4 months, while the longest bull market was 131.3 months. The average gain during each of those bull markets was 180.04%. The average length of these bull markets was 1,754 days or about 4.8 years. During the last 53 years, the stock market has spent more than 90% of its time in a bull market. 

 

Bear Markets

Bear markets don’t come around often. However, when they do, they tend to cause some catastrophic damage to many investors. That’s why it is important to know how often bear markets occur and how they will last. 

 

Bear markets are defined as a more than 20% fall from the all-time high in the stock market. Since 1968, the stock market has experienced eight bear markets. The shortest bear market lasted just 1.1 months. This was the COVID-19 bear market which only lasted around March to April of 2020. The longest bear market lasted 20.7 months during the early 1970s. The average loss during a bear market is about 36.34% and lasts for about 349 days or a little under a year. The market spends less than 10% of its time in a bear market. 

 

The thing about bear markets is that they tend to be much shorter than bull markets. However, bear markets tend to have more violent moves, while bull markets move slower and grind upward in prices. 

 

Tips on Handling Market Volatility 

Bull markets and bear markets tend to have a huge psychological effect on investors. Investing legend Peter Lynch says that most money is lost by investors waiting for a bear market to happen. That’s why it is suggested that investors simply dollar cost average into their positions and not worrying about gyrations and volatility in the market. Yes, there will be violent bear markets. However, the long-term trajectory of the stock market is higher. 

 

Preparing your Portfolio for any Market Conditions 

There will be both bull market and bear markets for investors. However, these changes in the market should not bother investors who have a long-term perspective. Over time, the market trend is higher and rewards those who spend time in the market rather than timing the market. 

 

Alpha Wealth Funds takes this sound advice and adds to it. We have specialized hedge funds such as the Low Volatilty Fund, designed to be market neutral, to make money in a bull, bear, or stagnant market.  The Insiders Fund has more opportunities in a bear market as company insiders tend to buy their stocks when they perceive them to be cheap. The rebound effect coming out of a bear market is where The Insiders Fund will really outperform. Most recently it did this with Covid-19 induced bear market performing more than twice the S&P 500 since that short bear market began. The Volatility Advantage Fund is designed to take advantage of volatility induced sell-offs. As markets return to normalcy, this Fund will generate significant alpha as well.

 

Our SMA accounts offer postures from aggressive to conservative and historically and may offer low cost diversification which often times is an investors best defense against unpredictable bear markets.  Having a cool head in the form of your investment advisor to help you manage through these inevitable downturns is invaluable. There is an old saying, “in a bull market no one needs analysts, in a bear market no one wants to hear from one.” That’s not true about our advisors. They will be here for you when you need them the most.

 

REFERENCE:

https://www.hartfordfunds.com/practice-management/client-conversations/bear-markets.html

https://www.cnbc.com/2021/04/19/when-the-bull-market-will-end-according-to-sp-500-history.html

https://www.investopedia.com/terms/b/bullmarket.asp