As difficult as bear markets can be for investors since no one likes to see stocks fall dramatically, it’s important to remember that these declines are normal. Not only that, the stock market has recovered from every one of these setbacks. Before you panic, consider the following.
What is a bear market?
Generally, bear markets occur when a broad index falls 20% or more from its most recent high. On the flip side, investors usually view an increase of 20% or more from recent lows as a bull market.
Despite these guidelines, there’s no “official” declaration of a bear or a bull market. Plus, these designations may vary by index. For instance, it’s possible for the Nasdaq to enter bear market territory before the Dow, or vice versa.
Bear Markets by the Numbers
On average, bear markets tend to be much shorter than bull markets. The average bear market for the S&P 500 lasts less than a year—289 days. By that metric, the 2022 bear market lasted a bit longer than normal, clocking in at 10 months. Bull markets, on the other hand, tend to last more than two years on average, historically speaking.
Source: Forbes
The bottom line is that neither the ups nor the downs last forever, even if they feel as though they will. During the worst downturns, there were short-term rallies and buying opportunities. And in some cases, people have profited over time by investing carefully when things seemed bleakest.
If you’re reconsidering your current investment strategy, try not to let volatility get the best of you. A financial advisor can help you remove some of the emotion from the equation to ensure your portfolio aligns with your goals regardless of current market conditions.
If you have concerns about how today’s stock market might impact your portfolio over time, contact a Bogart Wealth Advisor today.