In the spirit of Halloween, let’s talk about something really scary…. the next bear market. When will the next bear market be? Hint: you won’t know until we’re already in it.

A bear market is a downturn of 20% or more in any broad equity index (i.e. S&P 500). During the past 100 years, while only accounting for a small proportion of the overall market, bear markets have been fairly scary, especially for those who fail to prepare.

100 Years of Bear Markets

Oct. 2007- Mar. 2009 (56% loss)

Mar. 2000 – Oct. 2002 (49% loss)

Aug. 1987 – Dec. 1987 (33.5% loss)

Nov. 1980 – Aug 1982 (27% loss)

Jan 1973 – Oct. 1974 (48%loss)

Nov. 1968 – May 1970 (36% loss)

Dec. 1961 – Jun. 1962 (28% loss)

May 1946 – Jun. 1949 (29% loss)

Sep. 1929 – Jun. 1932 (86% loss)

 

So, how can you prepare? Have a plan, and stick to it.  Know why you are investing. Determine how much risk you can handle, both financially and emotionally– and do it before the next bear market.  Look for hidden risk, like concentrations in too few industries or stocks. Diversify. Rebalance.

If you are unsure, ask a professional.

 

 

 

 

 

 

 

 

 

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