Related Topics
Stocks , Investing , US Markets

Have Bear Markets Been Permanently Banned?

You have to wonder… but here’s a historic take on it

by Bob Stokes
Updated: June 01, 2018

This is from a May 29 CNBC article:

The European-inspired panic that brought down the stock market on May 29 will ultimately turn out to be a buying opportunity, [said a former hedge fund manager].

The point is not the goings-on in Europe or any other news. It's that whatever pundits blame for a market dip, that it will be just that, a temporary dip and not a real bear market.

That's a curious sentiment given the bull market has stretched for more than nine years. Throughout history, no bull market has lasted longer than ten... So, it's at times like this that we must remind ourselves that another bear market is inevitable.

Wall Street's definition of a bear market is a decline of 20% or more from an all-time high.

By this commonly accepted definition, the slide in the Dow Industrials from the peak high of 14,164 (Oct. 9, 2007) through its low of 6,547 (March 9, 2009) was obviously a bear market. The Dow lost 54% during those 17 months.

Standard & Poor's Corporation provides data on ten other bear markets that fit the definition above (two of the S&P 500 declines are slightly under 20%):

  • August 1956-October 1957: -21.6%
  • December 1961-June 1962: -28.0%
  • February 1966-October 1966: -22.2%
  • November 1968-May 1970: -36.1%
  • January 1973-October 1974: -48.2%
  • September 1976-March 1978: -19.4%
  • January 1981-August 1982: -25.8%
  • August 1987-December 1987: -33.5%
  • July 1990-October 1990: -19.9%
  • March 2000-October 2002: -49.1%

As you can see, this data only goes back to the mid-1950s.

According to Global Financial Data and MSNBC, the S&P 500 surrendered 29.6% from May 1946 to June 1949. Most people have at least heard of the most infamous bear market in U.S. history, when stocks fell 86% from 1929 to 1932, the great Crash of 1929. That was also the period of America's second deflationary depression. The first one occurred between 1835 and 1842.

In the several decades between the two deflationary depressions, America's financial system also experienced a number of shocks, like the Panics of 1873, 1893 and 1907.

The point is: Bear markets are a conspicuous part of American history and our financial system. Yet many market observers today, just like they did near previous major peaks, appear to be ignoring this obvious fact.

Unless human behavior changes and history stops repeating itself, it's not a matter of if, but when the next bear market will arrive.

The Elliott wave model is uniquely equipped to show you, via a few simple charts, just how close that moment may be. Our research is on record to have prepared subscribers for the 2007-2009 market crash, and we are preparing subscribers today, as well. Now is the time to see for yourself.

You Want a Portfolio That Allows You to Sleep Well at Night, Yet …

… the stock market's jump in volatility may have you a bit on edge.

Yet worry can transform into confidence, when you are on the RIGHT SIDE of of the DJIA's next big move.

Learn how our Elliott wave experts are preparing subscribers for the swift price changes that they see just ahead.

Details of our generous risk-free offer are just below …

Get unparalleled market insights with 2 months of the Financial Forecast and Elliott Wave Theorist

Your Financial Forecast and Elliott Wave Theorist team includes three of the best-known market analysts in the world – Robert Prechter, Steven Hochberg and Peter Kendall. If you are familiar with Elliott wave analysis, you know exactly who they are.

No other analysts in the world, anywhere, undertake the depth of research that goes into these publications. Throughout the month, Bob, Steve and Pete sift through mountains of data, often studying 100 years of data or more. Why? Because a chart of the big, long term waves is the only way to know precisely where in the pattern we are today – and therefore, precisely where we are most likely to go next.

Here's what you get with the Financial Forecast and Elliott Wave Theorist bundle

Every Month
At the end of each month, your team of analysts gets together and lets the sparks fly. The result? The Elliott Wave Financial Forecast. When you get a new issue, you can be sure it contains the most critical information you must know about the markets this month.

Latest Research
Once per month, Bob Prechter sends you his very latest research about Elliott waves in the markets and society. For 30+ years, The Elliott Wave Theorist has delivered more groundbreaking market research than any other publication on the planet.

BONUS: The Key Message of Elliott Waves in 2018 and Beyond
In this 43 minute streaming video, Steve Hochberg discusses key forecasts for various markets in his presentation from the 2018 Orlando MoneyShow.

Start Your Bundled Subscription Now


for two months of the Financial Forecast and Elliott Wave Theorist.