How long do bear markets last?

Now that we have understood what bear markets are, let us see how long the bear markets have lasted and to what extent the market fell during each of these bear markets. The above table shows the history of the last 14 bear markets in the US. The average duration of the bear market has been 19.6 months (rounded off to 20 months). It gives us an idea of how long an investor will have to be patient with their investments during a bear phase to enjoy the returns in the next bull market.

A bull market follows every bear market

Historically, it has been seen that after every bear market, all the losses are recovered, and new highs are made. This has been the case with both the US and the Indian markets. The above chart shows the 40-year Sensex journey from 100 to 50,000. The journey was certainly not smooth, and the Sensex tripped many times. Yet, those investors who kept the faith - and, in fact, invested more during each fall - got handsomely rewarded. Some of these falls (more than 20%) put the Sensex in a bear market, and many were less than 20%.

How to invest in a bear market?

During a bear market, you can choose one of the following investment options: Invest in an index fund/ETF Invest in an active mutual fund scheme Invest in stocks directly

Every bear market is a good opportunity to invest

We saw what bear markets are, how long they last, and how much the indices fell during each bear market. Every bear market is followed by a bull market, so it pays to invest during a bear market. Here is an interesting data point: While the average fall in US stocks has been 36% in a bear market, the average gain has been 114% in a bull market. Further, in India, the average duration of a bear market has been eight months, but the following bull market has lasted 2.5 to 3 years on average. So, it makes sense to use the bear market as an investment opportunity. So, load up your investment portfolio with good quality individual stocks or mutual fund schemes during a bear market - and you can reap the rewards in the next bull market!

Bear markets: How long do they last? How should you invest in them?

Date : 27/10/2022
Read: 8 mins

Every bear market follows a bull market wherein all losses are recouped, and markets eventually hit new highs. It follows that bear markets are a great time to make investments that earn you good returns.

Since the start of 2022, stock markets across the globe have been volatile with a downward bias. Bad news kept piling up with every passing day. Events like the Russia-Ukraine war, high commodity prices, supply chain disruptions, COVID-led lockdowns in China, high inflation, central banks raising interest rates, US Dollar strength, and fears of a recession all played a part in dragging the global markets down.  In 2022, almost all global stock markets fell. The only difference is that some were already in a bear market, while others managed to contain the fall. This brings us to the question: is the bear market a good opportunity to buy Indian stocks? Read on to find out. What is a bear market? A bear market refers to a situation where there is a prolonged fall. This applies ...

To read the full story