The Four Totally Bad Bear Recoveries: Where Is Today's Market?
This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.
In response to a standing request, here is an updated comparison of four major secular bear markets. The numbers are through the December 30, 2022 close.
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 3,835 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.
Nominal Total Returns
Now let's look at a total return comparison with dividends reinvested. The 1973 Oil Embargo Bear recovery is the top performer, up 370.7%. The 2007 crisis recovery is inches away in second place, up 228.4%.