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Bear Markets 1930 to 2022 Contextualized

Below is some data to help contextualize bear markets, this looks at bear markets from 1930 to present (2022).

Main takeaways: -From 1930 to 2022 we've had 25 bear markets -Average duration was 297.9 days -Average move was -35.3%

This graphs the beginning, end, duration, and move for each bear market in the date window. The bars represent duration and are read via the left axis. The line is the % move and is read via the right axis.

Some additional data below. I break down bear markets by different timeframes - some interesting information emerges (average duration variance spikes in 1970 to 1989; Move Variance spike in 1930-1949; etc). Another piece I found intriguing is are the outlier Months for bear market starting and ending, November for bear markets starting and October/June for ending.

We're no where near a bear market yet - down around 9% off highs. However, For those that haven't experienced these markets before, it's important to develop a plan. Sitting on the sidelines in cash, "waiting" is a dangerous game. Market timing is very difficult and is relatively unreliable long-term. (Also, interesting figure I came across, around 50% of the largest up moves in the market occur during bear markets).

In these conditions, I like to carry a portfolio hedge (via VIX/VXX long LEAP Calls), monitor sizing, and size down temporarily when some of my shorter-term indicators indicate significant downside potential. Markets crash down, not up (except for COVID, there goes that saying apparently). At this point, my goal for my account is reduction in variance and income (I mention this because different objectives will drastically alter approach).

Trade on!

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