No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Investing involves risks including possible loss of principal. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing. There is no assurance that the views or strategies discussed are suitable for all investors. ![]() This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Ryan joined Kelly Evans on CNBC last Friday to discuss some of these concepts. Investors with longer-term horizons should use this weakness as an opportunity, or as Einstein said in the above quote, we’ve got to keep our balance and move forward. We do not know when this one will, but we don’t expect this incredible streak to end now. Lastly, there have been a lot of bear markets over time, but one thing that has always happened is stocks have eventually come back to new highs. Should this bear market end soon (our base case), it could bode well for a quicker recovery once again. This was not very surprising, but when the bear market decline was less than 22%, it took only seven months on average to make up the losses versus 27 months if the bear was worse than -22%. Additionally, if the bear market was worse, it took longer to recover. The good news is the past three bear markets recouped losses in 5, 4, and 4 months. While the recessions of 1974, the early 1980s, dot com burst, and the financial crisis all saw the damage continue for much longer.Īs shown in the LPL Chart of the Day, it took about 19 months on average for stocks to recover their bear market losses. ![]() Meanwhile, stocks did manage to bottom quickly during the recessions of 19. 1962, 1966, and 1987 all recovered quickly and didn’t happen in a recession. Once again though, if the bear happened around a recession, the weakness usually continued much longer and vice versa. What about how quickly after a bear market starts do stocks finally stop going down? This one has something for everyone, as the least ever was only 1 day in 1957, while it took 19 months for the bleeding to stop in the early 2000s. We do not see a recession on the horizon, which could be a clue returns could be strong going out a year. One more look at the table above shows that only three times were stocks lower a year later and all were associated with major recessions. “In fact, a median gain of nearly 24% a year after a bear market starts may help some beaten-down bulls confidently stay the course.” One popular question has been what happens after stocks go into a bear market? “As rough as bear markets are, the good news is the future returns really improve once stocks are down 20%,” explained LPL Financial Chief Market Strategist Ryan Detrick. Here are four things to know should stocks go into a bear market. ![]() With the S&P 500 down 18.7% though (as of Friday’s close) a bear market is still quite possible. The S&P 500 Index was down more than 20% on an intraday basis on Friday, but managed a huge rally late to avoid closing down 20% and moving into an official bear market. To keep your balance, you must keep moving.” – Albert Einstein
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