Broker Check

The History of Bears

March 08, 2022

No, I’m not talking about the four-legged animal found throughout North America or the two-legged stuffed ones that are cute and cuddly, that are most often found in a child’s bedroom.  I want to talk about the worst kind of bear –  a "Bear Market", which can test even the staunchest, most resilient investors. 

Equities are defined to be in a “Bear Market” when they fall at least 20% from their most recent highs.  As I write today the S&P 500 Index is technically not into “Bear Territory” it is however, getting perilously close to reaching our first “Bear” since 2008/2009.

Of course, anyone who has not been investing for more than 14 years, has experienced mostly good times and wouldn’t have been through a bear market.  When the bear market and subsequent eye popping levels to which the equity markets sank in 2008/2009, that left investors licking their wounds, is what comes immediately comes to mind.   

What about 2020 Lon, when the S&P 500 Index dropped 34% in 33 days, wasn’t that a bear market?  I’m discounting that, because that was plain and simple unadulterated panic, it was the very beginning of the pandemic, where investors had more fear and questions, than they had data or answers.  That drop only lasted a month, and in terms of the decades of investment required to reach your financial goals and achieve the long-term superior inflation crushing performance that you need, it was a flash in the pan. 

Should we reach bear market territory in 2022, (and I am by no means implying that we will or will not, because I haven’t a clue, and neither does anyone else), it would mark yet another bear market in a long list of them.  Take a look at this chart:


Averages tell us, that since the end of WWII, bear markets occur once every 6 years or so, and last an average of 11 months, which in the context of a multi-decade retirement, is but a blip on the screen.  I get it, they are however, regardless of their causes, scary as hell to go through! 

Investors’ last experienced a bear market in 2008/2009, where over that 13-month period the S&P 500 Index lost more than half its value.  It took the Index, exactly almost to the day, five years to reach its previous highs.  There has ALWAYS been, and will ALWAYS be a headline, or a narrative designed to get you out of your financial goals an into a fear-based market-timing asset allocation plan.

I’ve never come across ANY successful investment strategy where buying high and selling low, got you closer to your financial goals. 

Understand the reasons that bear markets begin and end may always be different, but the results are the same.  Bear Markets are just necessary stepping stones in the wall of worry that all eventual great bull markets climb. 

We remain steadfast in our commitment to ensuring that our clients stay on track with their financial goals.  There has always been a “reason” to panic or to change your investments based on the headlines or a particular narrative, and yet, the equity markets have been amazing resilient in the face of the never-ending cycle of bad news.

Stay diligent and confident, my friends.

As always, should you need us, we are here for you!