RMR Wealth Management Blog

This Is The Best Illustration of History's Bull And Bear Markets We've Seen Yet - posted by Brian Mayer, RMR Wealth Management, LLC

RMR Wealth Management - Wednesday, January 07, 2015

(originally written by Sam Ro)

 

The S&P 500 is up a whopping 212% from its March 2009 low of 666.

That means this bull market has been humming for a very long 68 months, which seems like a long time.

But by historical standards, the length and strength of this bull run isn't that spectacular.

Some folks have been tweeting this awesome chart from Morningstar's Jerry Kerns. The blue illustrates past bull markets' durations and returns (total and annualized). The red illustrates the bear markets. (Note: this was published in May.)

This chart does a fantastic job communicating a few important things. For instance, there's a lot more blue than red, a unique way of reminding investors that stocks have spent more time going up than down.

We particularly love what's illustrated by the y-axis. It's the multiple by which the stock market will go up or down from the beginning of each bull and bear market, respectively.

As you can see, the amount by which the stock market can fall is limited to 100%. Indeed, market crashes are scary, but you usually lose less than 100% of your investment.

However, the amount by which it can go up is unlimited. Indeed, this is why shorting the market can be a very scary process. It's also a reminder that you can make more than 100% of your initial investment if you're long.



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