Bull and Bear Market Durations

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  1. marketmap commented on Jan 22

    If that’s the SP 90 index, then there was a decline (- 46%) from 2/1/1937 to 4/1/1938.
    A subsequent rally ( +31% ) from 4/1/1938 to 11/1/1938, then another decline into 4/01/1942

  2. rd commented on Jan 23

    It would be interesting to see this graph with inflation and deflation adjustments.

    The past 10-15 years have seen pretty low inflation which is why we have low interest rates. The inflation numbers haven’t jumped around a lot, so they have not been particularly disruptive. That may change if deflation starts to come into play.

    The 1930s had significant deflation which shows up in the deep 1929-1932 bear market. On an inflation/deflation adjusted basis, the 1932 bottom doesn’t look super low the way it does on nominal graphs. Just coming back out of deflation over the next decade was a significant reflation event which shows up in the big bull rise.

    WW II had price controls after the disruptive deflation of the Great Depression. The 1950s was a recovery from that whole disastrous 15 year period.

    The 1970s and 1980s had significant inflation. It took a decade after Volcker’s crushing Fed rates move to bring inflation back down to close to historical norms. That 20+ year period of significant inflation shows up in the big bull move. The market bottom 1982 actually saw the lowest stock market valuations since the Great Depression based on CAPE, dividend yield, market cap relative to GDP etc. but it plots as a bull market on the graphs because of the inflation.

    So would we expect to see one of those 5-10 fold moves today if inflation is stable between 1% and 3% for the next 5-10 years?

  3. Scott Teresi commented on Jan 23

    Something seems strange… it looks like it’s missing at least one 20% drop in the 1930’s. Didn’t the bear market after 1929 involve multiple surges and crashes of more than 20%?

    • rd commented on Jan 23

      Those are the valleys in the bull market in the late 1930s and early 1940s. They didn’t count them as bear markets. Various market historians view 1937 differently.

    • Scott Teresi commented on Jan 23

      The chart says it defines a bear market as the index closing 20% down from its previous high. But apparently it’s not following that rule!

  4. heywally commented on Jan 24

    These charts give a nice perspective.

    Regardless, I’ll continue to follow my strategy of what usually works: buy the dips via indexes in scales, scale out into strength. Repeat often with nuances ……

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