The Four Totally Bad Bear Recoveries: Where Is Today's Market?

This chart series features an overlay of the Four Bad Bears in U.S. history since the equity market peak in 1929. The numbers are through the March 28, 2024 close. The Four Bad Bears in U.S. history are:

  1. The Crash of 1929, which eventually ushered in the Great Depression,
  2. The Oil Embargo of 1973, which was followed by a vicious bout of stagflation,
  3. The Tech Bubble crash and,
  4. The Financial Crisis following the (then) 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. We've chosen the aligned peaks before each of the four epic declines as our starting point. An interval of 252 days has been used for the x-axis, roughly equivalent to the number of market days in a calendar year. (Note that the x-axis in all charts shows the number of years since each bear market's peak, which have been aligned.)

The first chart below shows the price, excluding dividends, for these four historic declines and their subsequent recoveries. As of March 28, we are 4,146 market days from the 2007 peak in the S&P 500. Among the four, the bear recovery for the 2007 Financial Crisis stands out as the top performer, with a remarkable gain of 235.7%, while the Crash of 1929 lags behind as the worst performer, down 41.7%.

Four Bear Markets Nominal Price Growth

Inflation-Adjusted Performance

When adjusting for inflation, the 2007 Financial Crisis recovery is still the top performer, but with significantly lower gains. The gap between our current recovery and the other three widens due to several years of exceptionally low inflation. Most notably, the 1973 Oil Embargo recovery is reduced dramatically after being adjusted for inflation, going from 203% nominal gains to 7% real gains.

Four Real Bear Markets