Stock Market Corrections and Bear Markets
We are supporting the refugees from the Ukraine conflict and doing what we can to assist them in this difficult time. DWM has made contributions to help refugees and provide care to those in need of medical services in Ukraine.
If you would like to donate, here are two organizations you may find of interest. There are many more all focused on humanitarian efforts.
Lastly, on the subject of Ukraine, it’s important to remember that these are real people being impacted by this war. Sometimes we lose track of the real human toll, and I thought this sweet video of a girl singing her favorite Disney song from the movie Frozen perfectly captures the state they find themselves in. They are all in a shelter hoping the conflict does not cause them harm. See the clip below.
The market continues to fluctuate based on ongoing concerns about the Ukraine/Russia conflict as well as rising oil prices. We expect this to continue as long as the conflict continues.
It's important in these moments to take a breath and recognize that historically, downturns in the market don't last forever. A recent CNBC article highlights data regarding market corrections and bear markets and the average time for recovery. I think you'll find the information interesting.
A correction is defined as a 10% drop in prices. Below we are providing information from a recent CNBC article that highlights how markets recover after a 10% drop. On average, recovery takes four months after the end of a correction.
- “There have been 26 market corrections (not including Thursday) since World War II with an average decline of 13.7% over an average of four months.
- Recoveries have taken four months on average.
- The most recent corrections occurred from September 2018 to December 2018. The S&P 500 bounced into and out of correction throughout the autumn of 2018 before plunging into a bear market (a 20% decline from its all-time high) on Christmas Eve.”
A bear market is defined as a 20% + drop in prices. Below we are providing information from a recent CNBC article that highlights how markets recover after a 20% + drop. On average, recovery takes 14.5 months after the end of a bear market.
- “There have been 12 bear markets since World War II with an average decline of 32.5% as measured on a close-to-close basis.
- The most recent was October 2007 to March 2009, when the market dropped 57% and then took more than four years to recover. The S&P 500 closed in a bear market in December 2018 using intraday data.
- Bear markets have lasted 14.5 months on average and have taken two years to recover on average.”