History of US Bear & Bull Markets Since 1926

I saw a really cool post on twitter that charted all the bear and bull markets in the US since 1926. Here is a link to the chart.

Keep in mind that only the S&P 500 is charted here. The S&P 500 is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ

bull-beear

The most interesting thing I found through this chart is this –

  • the average Bull Market period lasted 8.9 years with an average cumulative return of 490% (or an average annual return of 55%)
  • the average Bear Market period lasted 1.3 years with an average cumulative loss of -41% (or an average annual loss of 31.5%)

This simply means that you are almost always guaranteed to make money investing in the stock market. Think of it this way – if you began investing in the stock market with $1 at the start of a bull market, you are likely to generate a cumulative return of 490% or have roughly $4.90 at the end of the bull run, after 8.9 years. Then comes a bear market and wipes out about 41% of your portfolio in 1.3 years. So you’re left with about $2.90 after a bull and bear market (or about 10.2 years).

Essentially, you have tripled your investment in about 10 years, after all the ups and downs – a much higher return than if it sat in a regular savings account or under your mattress. If the money sat in a savings account earning on average 2% per year, you would have about $1.22 after about 10 years.

* none of these figures were adjusted for inflation

 

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