After a bear market
May 25, 2022
If we look at bear markets over the last 70 years in the US, they have in 7 times out of 10 a common trait. The market indeed most of the time did well after it entered bear market territory, i.e. once it had fallen more than 20% since peak. On average, the market was up 14.8% over the next 12 months after it entered bear market territory. We conclude that statistically at least there is a high probability that equity markets will rebound over the coming 12 months once we are officially in bear market territory. We came close to a bear market last week for the S&P 500.