Smooth Air and Turbulence. Bulls and Bears.

Some days are smooth and clear, and some days not so much. Some days are definitely more fun than others. While we find weather quite unpredictable, the same can be said for the stock market. The one thing we know with the markets is that we'll have Bull and Bear markets. Figure 1 below depicts nearly a century of Bull and Bear market reflected in the S&P 500 returns.

Figure 1. Bull and Bear Market in the S&P 500 Index Total Returns 1926-2020.

What can we take away from this data?

Stock returns are volatile, but nearly a century of bull and bear markets shows

that the good times have outshined the bad times.

• From 1926 through 2020, the S&P 500 Index experienced 17 bear markets,

or a fall of at least 20% from a previous peak. The declines ranged from —21%

to —80% across an average length of around 10 months.

• On the upside, there were 18 bull markets, or gains of at least 20% from a

previous trough. They averaged 54 months in length, and advances ranged

from 21% to 936%.

• When the bull and bear markets are viewed together, it’s clear equities have

rewarded disciplined investors.

See Dimensional Fund Advisor's one-pager for details and disclaimers linked here.

I'm happy to talk this subject over with you on a complimentary call. As a fee-only fiduciary advisor, I never receive commissions and therefore am unbiased on this topic.

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Disclaimer: Past performance is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. Investments in securities involve the risk of loss. Nothing in this blog should be considered financial advice or recommendations. Your questions are unique to you and your own personal financial circumstances. You should consult with a financial professional before making a financial decision. See full blog disclaimer.