Insights

CHARTS  |  MARCH 2018
Bear Markets Look Less Fierce With a Long-Term Perspective
Our latest chart shows that bull markets have historically lasted much longer than the average bear market, with gains that far outweigh average market declines.

Recent volatility may have caused some investors to panic and head for the exits, but a long-term focus can help put bear markets into perspective. Since 1949 there have been nine periods of 20%-or-greater declines in the S&P 500. And while the average 33% decline of these cycles can be painful to endure, missing out on part of the average bull market's 268% return could be even worse. The much shorter duration of bear markets —14 months on average — is also a reason why trying to time investment decisions can be difficult and is usually ill-advised. Rather than indiscriminate selling, investors who are nervous about heightened volatility may want to consider flexible equity funds with a history of resilience during downturns. Investors should also re-examine their bond exposure for excess risk, as diversification from equities is one of the primary roles of fixed income in a balanced portfolio.