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| This devastating bear market began with a new high in January, 1973 in the S&P 500 of 121.74. From that high, the index fell for 21 months to a low of 60.96. That is a drop of 50%!!! From the low the S&P 500 began a slow recovery. It didn't break its January 1974 high until July 1980, almost six and a half years later. Below is a graph of the January high and subsequent drop. |
| We didn't put these graphs and examples in here to scare you or make you avoid
the stock market. The stock market is the place to be invested for the long run. Over long
periods of time the stock market has had far greater returns than any other investment
class. But if you are invested or considering investing in the stock market you need to be prepared for bear markets. They will happen. And they will reduce the value of your holdings substantially. If you are a dedicated buy and hold investor, you must consider these bear markets. Will your steadfast resolve hold in the face of a 30% decline? How about a larger decline? If not, then you need to reconsider the buy and hold philosophy. |
Other Bear Markets: '87 Crash | '29 Crash | Nikkei Bear
Home | Daytrading | Bull and Bear Markets | Walker Market Letter