A Closer Look at Historical Bear Markets

What is a bear market?

A pullback is a market decline of 5%. A correction is a market decline of 10%. A bear market doesn’t occur until the decline is 20%. 

These declines are nearly impossible to predict, but you can prepare. While volatility has been relatively muted over the past decade, many investors remember living through the last few bear markets and the stress that comes along with watching your account balances go down month after month. Anyone invested in the markets during the 2008 global financial crisis can vividly remember the impact it had on their financial health. However, there is a whole generation of investors that have never experienced a bear market like this or the lessons that come with it. 

The chart below explores the major bear markets throughout history. While volatility is a normal part of investing, the sharpness and longevity of each bear market varies widely.

Bear Market DetailsCumulative Returns
of the S&P 500® 1

Market EventsMarket PeakBear DeclinesDuration (years)1 Year Later2 Years Later
1Crash of 1929 - Started the Great DepressionSep 1929-83%2.8162.89%146.90%
21937 Fed Tightening - Premature policy tighteningMar 1937-50%1.035.18%59.01%
3Post WWII Crash - Post-war demand taperingMay 1946-30%2.561.23%74.04%
4Flash Crash of 1962 - Flash crash, Cuban Missile Crisis/Cold War jittersDec 1961-22%0.48.01%12.72%
5Tech Crash of 1970 - Economic overheating, civil unrestNov 1968-22%0.431.16%59.37%
6Stagflation (High Inflation/Slow Growth) - OPEC oil embargoJan 1973-29%1.541.83%57.07%
7Federal Reserve (Volcker) Tightening - Whip Inflation NowNov 1980-43%1.738.14%80.19%
81987 Crash - Program trading, overheating marketsAug 1987-30%0.223.33%61.36%
9Tech Bubble - Extreme valuations, .com boom/bustMar 2000-45%2.024.40%41.65%
10Global Financial Crisis - Housing bubble, Lehman collapseOct 2007-51%1.253.62%88.30%
11Global COVID-19 CrisisFeb 2020-34%0.256.35%?

Source: MSNBC, FactSet, and S&P Dow Jones Indices. The index is unmanaged, is not available for investment and does not incur expenses. Monthly returns are shown for S&P 500® Index, except for the COVID-19 Crisis, which is daily.

As of December 31, 2021.

1 Based on the closest month-end date after the bear market end date. Uses monthly returns.


Source: MSNBC, FactSet, and S&P Dow Jones Indices. As of December 31, 2021. The indices are unmanaged, are not available for investment, and do not incur expenses. Daily returns are shown for the S&P 500® Index. Click here for index definitions. Past performance is no guarantee of future results.

Investing involves risk, including possible loss of principal. Diversification does not guarantee a profit or protect against a loss in declining markets.

Investments in debt securities are subject to credit and interest rate risk. An increase in interest rates typically causes the value of bonds and other fixed income securities to fall.

Investments in international securities are subject to certain risks of overseas investing including currency fluctuations and changes in political and economic conditions, which could result in significant market fluctuations. These risks are magnified in emerging markets.

Investments in small-capitalization companies are subject to greater price volatility, lower trading volume, and less liquidity than investing in larger, more established companies.

Real estate investments are subject to factors such as changing general and local economic, financial, competitive, and environmental conditions.

Alternative investments are speculative, subject to high return volatility, and involve a high degree of risk including, but not limited to, the risks associated with leverage, derivative instruments such as options and futures, and distressed securities, and may be illiquid on a long-term basis in short sales. There can be no assurance that these types of strategies will achieve their objectives or avoid substantial losses. Alternative investments may also be subject to significant fees and expenses.

Investments in emerging markets are subject to risks such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital, and changes in local governmental attitudes toward private investment, possibly leading to nationalization or confiscation of investor assets.

A bear market is a prolonged period in which investment prices are falling or are expected to fall, accompanied by widespread pessimism. A 20% decrease of the S&P 500® Index was used and calculated on a monthly basis. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly.

Market Risk: Market prices of investments held by the Fund may fall rapidly or unpredictably due to a variety of economic or political factors, market conditions, disasters, or public health issues, or in response to events that affect particular industries or companies.

AMG Distributors, Inc., a member of FINRA/SIPC.

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