What is a Bear Market

Alexis DuffyArticle, Monthly Newsletter, Newsroom

Bear facing you with a chart in the background

Presented by The PensionmarkMeridien Team

With all the talk about a bear market, We thought it was an ideal time to reach out and share some insights on the subject.

Bear Market, Defined

For major U.S. stock indexes, a bear market is defined as a 20% decline from its most recent all-time high over a prolonged period of time. Typically, the period of decline is associated with negative investor sentiment1, weak economic data releases, and expectations of a shrinking economy.

For those keeping score at home, the S&P 500 (considered the broadest measure of the U.S. economy) recently experienced a 20% decline from its all-time closing high reached on January 3rd, 2022, of 4796.57. Bear market territory is 80% of that level: 3837.26 2. This price area for the index has the attention of asset managers and traders.

So far, 2022 has been the year of the bear.

Bear Market Durations

Good news–bear markets tend to last a much shorter period of time than their bull market counterparts. According to CNBC, the average bear market lasts 359 days, although there are no one-size-fits-all scenarios.

Let’s consider some recent bear markets:

  • Coronavirus bear market (2020) 33 days 3
  • The Great Recession bear market (2007-2009) 408 days 4
  • Dotcom bear market (2000-2002) 1.5 years 5

Each bear market has its own circumstances–including varying economic backdrops and events. Coronavirus featured, well, coronavirus. The Great Recession was all about subprime mortgages, and the Dotcom bear was about an overinflated tech market in the internet’s early days.

Contrarily, bull markets last much longer than bear markets historically, with the average bull market duration being 3.8 years since 1932 (according to data from Kiplinger 6). The longest bull market is fresh on everyone’s mind–lasting 11 years from 2009 to 2020.

For the current market cycle, we have inflation and interest rates front-and-center. The S&P 500 closed in bear market territory on June 13th, 2022, marking a 20% decline from the peak.

The Bear’s Claw

It’s good to be aware of bear markets, but that doesn’t mean you should fear them. They are inevitable and are part of the journey of every long-term investor.

That said, bear markets do have ramifications outside of Americans’ investment portfolios. While each bear market is different, the current economic landscape has consumers cutting back 7 due to high prices. No surprises there.

Looking ahead, once inflation cools down and pricing begins to come back to earth, there could be a demand slowdown, though that is not a certainty. The slowdown would result from consumers needing time to recover from this period of higher costs. Combining cooling demand and a bear market environment could result in a period of stagflation 8—more on that another time.

Discipline and Longevity

The reality is that nobody knows with any degree of certainty how long major stock indexes could remain in bear market territory.

Here is what we do know: bear markets are just as inevitable as bull markets. Fortunately, bear markets occur much less frequently than their bull market counterparts.

Regardless of the point in time of a market cycle, the disciplined long-term investor mindset should remain consistent. After all, building a secure future 9 by accumulating assets over time will inevitably provide exposure to several market cycles 10 and their associated peaks and valleys. 

With that said, for some, it may be worth adjusting investments 11 in the face of a market downturn. If you have questions about your portfolio or market cycles, or if there is anything We can help you with, please reach out, and we’ll discuss. 


The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com

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1.   Fortune, June 17, 2022
2.   Trading View, June 24, 2022
3.   The Washington Post, June 14, 2022
4.   The Street, June 13, 2022
5.   Investopedia, June 16, 2022
6.   Kiplinger, August 19, 2020
7.   CNN Business, June 2, 2022
8.   The World Bank,  June 7, 2022
9.   CNBC, July 1, 2021
10. Corporate Finance Institute, May 2, 2020
11. Nerdwallet, June 14, 2022

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).