The stock market is a volatile place, and bear markets are an inevitable part of the cycle. But how long do they last? Since 1928, the S&P 500 has experienced 21 bear markets, with an average duration of 388 days. Excluding longer and shorter bear markets, the average duration is about 330 days, or just under a year. A bear market is defined as a period in which prices have fallen by 20% since a recent peak.
The average duration of a bear market is about 9.5 months and occurs, on average, with a difference of about 3.5 years from each other. The magnitude of the pace of mass selling qualifies it as a bear market, but a V-shaped recovery often begins months after the ground hits. Fortunately, there are almost the same number of bear market cases in the past where stocks plummeted but the economy didn't. The stock market declines of 36.1% in the late 1960s and 48.2% in the early 1970s, which lasted 1.5 and 1.7 years respectively, also began before the recessions and ended shortly before those economic contractions bottomed out.
The worst place to hide in a bear market is usually the fastest-growing stocks with the broadest following. Market corrections, when prices fall by at least 10%, are usually temporary and markets will always move ahead of economic readings, so investors should be sensitive and aware of the possibility of a reversal.A bear market is considered official when a stock index falls 20% from its peak. Some analysts suggest that a bull market is at stake when the market rebounds by 20% without falling below its previous low. According to CNN's Fear & Greed Index, the market is currently in Fear mode, an improvement from a month ago when sentiment was in Extreme Fear.Overall, bear markets can be daunting for investors but understanding their average duration can help to put things into perspective.
On average, bear markets last just under a year and are followed by bull markets that last an average of 2.7 years.
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