Insights

CHARTS  |  SEPTEMBER 2017
Not All Bear Markets Are Created Equal
Our chart shows that when bear markets occur during an economic expansion rather than a recession, they tend to be much shorter and less severe.

The U.S. equity bull market is in its eighth year, but returns can't go up forever. With volatility near historic lows and the last market pullback a distant memory, investors may not be prepared for a downturn. But declines are a normal part of markets, and investors who stay the course over the long run are typically rewarded.

One silver lining may be that market declines are typically much shorter and less severe in the absence of an economic recession. On average, bear markets during an expansion recover within six months — nearly three times quicker than when they coincide with a contraction. And while valuations may be stretched, the U.S. economy does not show any major excesses often associated with a near-term recession. Volatility will eventually pick up again, and when it does investors are best served by remaining calm and maintaining a long-term perspective.