Compare to the most severe markets in the past, the current bear market look extremely cruel and only can be rivaled by the Great Depression bear market.
After 17 months of rollercoaster journey, the current bear market is getting worse as the S&P 500 index suffered 56 percent loss from its most recent peak when it plunged to the 12-year low on Mar. 9. On the same day, the blue chips Dow Jones Industrial Average index slipped to its new low marking 53.8 percent loss in this bear market.
Comparing to historical average, this bear market look extremely brutal. The market’s average decline is just 30 percent during bear markets since the 1929 market crash, while the past bears lasted an average of 13 months.
The current bear market only can be rivaled by the Great Depression bear market. Back then the Dow Jones Industrial Average lost 89 percent in 34 months, from 1929 to 1932. The stock market didn’t completely recover until 1954, when the Dow returned to its 1929 peak.
Unlike most bear markets, the current market started with a financial crisis. Study conducted by Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Havard Universtiy found that bear markets during previous banking crises were atrocious. The study of 21 bear markets during banking crises around the world revealed that stocks fell an average of 56 percent and those bear markets lasted in average 3.4 years. The current stock market has tumbled the same magnitude as the study exposed.
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