This bear market lasted 622 days, with the overall market dropping 27.11%. Inflation seeped into the economy, and unemployment rates peaked at 9%. The recession lasted 16 months, with much of the economic woes starting with the OPEC oil embargo. This bear market lasted 630 days with a 48.2% decline in the market. This recession led to a brief recovery in 1971 when the GDP rose 11.3%. Unemployment peaked at 6.1%, with the GDP falling 1.9% in the fourth quarter of 1969 and 0.60% in the first quarter of 1970. The recession started in December of 969 and continued until November 1970. This bear market went on for the better of two years, with the market losing 36% of its value. The recession lasted until April of 1958 with unemployment reaching a high of 7.5% in July of 1958. While the stock market saw 446 days of a bear market with a 21.63% drop in value, the GDP fell 4.1% in the last quarter of 1957 and 10% in the first quarter of 1958. The cause of this recession was a rapid rise in interest rates by the Fed. During this period, unemployment peaked at 7.9%. An 11-month recession began in November 1948 and lasted until October 1949. This bear market lasted 363 days with a more than 20% drop in the market value. This decline paralleled a 12.9% economic contraction, with unemployment going as high as 24.7%. Between these dates, the stock market lost 73% of its value. This is actually the start of several bear markets that were part of the Great Depression that lasted through March of 1933. Take a closer look at the bear markets since 1928 that have led to a recession. Not every bear market leads to a recession. The average decline was 35.62%, and the average length of time was 289 days.Ĭlick to enlarge Historical Bear Markets That Lead To Recessions There have been 28 bear markets since 1928. Tip: When the yield curve inverts, credit tightens and business activity tends to go down. The yield curve is another forward-looking indicator that a bear market may be upon us. Investors can use financial tools such as the Leading Economic Index as a forward-looking indicator of economic variables. Those seeking to cash out for a profit may find that hard to do, especially if the investment was a short-term strategy. The markets go down, which means that investment values go down. Investors don’t like bear markets because of what happens. Tip: Long-term investors may be frustrated with bear markets, but will generally see their portfolios grow again over time as the market shifts back to a bull market. For the same 26 bear markets seen since 1928, there have been 27 bull markets. For every bear market, a bull market follows. Cyclical Nature Of MarketsĬapital markets are cyclical in nature. Bear markets can be part of a recession where the economy has high unemployment and negative GDP output. Bear markets indicate a downward trend in the market and can be triggered by a market correction where the market drops between 10% to 20% in a short period of time. Ryan McVay/DigitalVision via Getty Images Definition of a Bear MarketĪ bear market is one where the market declines 20% or more over at least a two-month period of time.
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