Recessions and Bear Markets - Bespoke Reference

We've decided to revisit two of our Bespoke Reference posts from this Summer since they are even more relevant now.

Expansions and Recessions

Below we have graphically summarized US economic expansions and recessions since 1900 (red=recession, green=expansion).

One of the most interesting aspects of the above chart is that over the last one hundred years, recessions have become shorter in nature.  For example, three of the first four recessions during the 20th Century lasted longer than 600 days.  During the last four recessions, however, only one has been longer than 250 days (the longest was 487).

During expansions, we have seen the opposite occur.  Over the last 100+ years, expansions have become longer in duration.  Prior to WWII, there were ten economic expansions.  Of those, only four (40%) lasted longer than 1,000 days.  Since WWII, however, there have been eleven expansions, of which nine (81%) crossed the 1,000 day threshold.

Bull and Bear Markets

The S&P 500 is now down nearly 20% from its highs.  With the markets very close to bear territory, it's important to note what the typical bear looks like.  Below we highlight historical bull and bear markets of the S&P 500 since 1945. A bull market is defined as a closing price rise of 20% that was preceded by a decline of 20%.  A bear market is defined as a closing price decline of 20% that was preceded by a rise of 20%.  Since 1945, the average bull market has been 1,625 days with an average rise of 149.53%. The average bear market has been 393 days with an average decline of 30.57%. So the typical bull is long and strong, while the typical bear is short and nasty.  Bespoke Premium members have access to PDFs and downloadable Excel files of all Bespoke Reference reports.

Sign up for Bespoke Premium today to get more in-depth reports from Bespoke.

We've decided to revisit two of our Bespoke Reference posts from this Summer since they are even more relevant now.

Expansions and Recessions

Below we have graphically summarized US economic expansions and recessions since 1900 (red=recession, green=expansion).

One of the most interesting aspects of the above chart is that over the last one hundred years, recessions have become shorter in nature.  For example, three of the first four recessions during the 20th Century lasted longer than 600 days.  During the last four recessions, however, only one has been longer than 250 days (the longest was 487).

During expansions, we have seen the opposite occur.  Over the last 100+ years, expansions have become longer in duration.  Prior to WWII, there were ten economic expansions.  Of those, only four (40%) lasted longer than 1,000 days.  Since WWII, however, there have been eleven expansions, of which nine (81%) crossed the 1,000 day threshold.

Bull and Bear Markets

The S&P 500 is now down nearly 20% from its highs.  With the markets very close to bear territory, it's important to note what the typical bear looks like.  Below we highlight historical bull and bear markets of the S&P 500 since 1945. A bull market is defined as a closing price rise of 20% that was preceded by a decline of 20%.  A bear market is defined as a closing price decline of 20% that was preceded by a rise of 20%.  Since 1945, the average bull market has been 1,625 days with an average rise of 149.53%. The average bear market has been 393 days with an average decline of 30.57%. So the typical bull is long and strong, while the typical bear is short and nasty.  Bespoke Premium members have access to PDFs and downloadable Excel files of all Bespoke Reference reports.

Sign up for Bespoke Premium today to get more in-depth reports from Bespoke.

Comments

[John Kissinger]

you show the dot.com recession as two bear markets broken by a brief (three month!) bull market. It is far more instructive to see this as a single bear market with a suckers rally in the middle, and with a total decline of 50%.
The question, then, is how does the current market compare with the dot.com crash, which really affected only one regional market, the bay area? The consumer is broke, housing is likely to go down another 20%, defaults have only just begun, monoliners and other insurers are toast and the IB's will have to take all this toxic waste back onto their balance sheet, smaller banks are already restricting existing lines of credit to companies, commodity producers are toast, too, and asia's bubble is popping next. IMO the dot.com was nothing like this...

Useful, however, to consider that the market likely has another 15% to go before a major rally is likely to take hold.