The Four Totally Bad Bear Recoveries: Where Is Today's Market?
In response to a standing request, here is an updated comparison of four major secular bear markets. The numbers are through the September 30 close. It's a bit early to chart a potential bear as a result of the COVID-19 pandemic, so we are sticking with the four for now.
This chart series features an overlay of the Four Bad Bears in U.S. history since the equity market peak in 1929. They are:
- The Crash of 1929, which eventually ushered in the Great Depression,
- The Oil Embargo of 1973, which was followed by a vicious bout of stagflation,
- The Tech Bubble crash and,
- The Financial Crisis following the record high in October 2007.
The series includes four versions of the overlay: nominal, real (inflation-adjusted), total return with dividends reinvested and real total return. The starting point is the aligned peaks prior to the four epic declines. We've used an interval of 252 days for the x-axis as it is roughly the number of market days in a calendar year.
The first chart shows the price, excluding dividends for these four historic declines and their aftermath. We are now 3,268 market days from the 2007 peak in the S&P 500.
When we adjust for inflation, the gap between our current recovery and the other three widens, thanks to exceptionally low inflation in recent years.