The Irrelevant Investor: When Do Stocks Bottom?

Bear markets are measured in months, bull markets are measured in years. Over time, that’s a good fact to remember. But in the middle of a bear market, it can still be tough to sit through.

That’s why many investors are looking at trends to determine when the current bear market will end. Past trends tell a number of different stories, although there are also significant outliers.

The most significant outlier is the last recession. The bear market of 2020 took 22 days to unfold, and an 11 further days after dropping 20 percent before hitting a bottom. In 1949 and 1957, two bear markets unfolded just one day before a cyclical bottom.

On the other hand, some of the worst performing bear markets, in 1974 and 2002, took 310 and 576 days to unfold in total.

The averages are somewhat skewed by these results. It takes the stock market 236 days on average to go from a peak to a 20 percent pullback. Then a further 131 days on average to reach the bear market’s bottom.

Given that stocks peaked back in November, we’re somewhat close to this average right now. And another 130 days from now would put a bottom in around October. But that’s if the average holds.

To read the full data on historical bear markets and where investors stand today, click here.