Capital Ideas

Investment insights from Capital Group

Market Volatility
Not all bear markets are created equal

The U.S. equity bull market is more than nine years old, but the recent spike in volatility has caused investors to wonder if the bull run is on its last legs. However, declines are a normal part of markets, and investors who stay the course over the long run typically have been 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 recovered within six months – nearly three times quicker than when they coincided with a contraction.

U.S. recessions occur for a variety of reasons, but typically are the result of a macro or financial imbalance. At this time the imbalances don’t seem extreme enough to derail the economy, but suggest weakness sometime in 2020 as they continue to build.  If monetary policy continues to be accommodative, the ramifications of those imbalances could be pushed even further down the road. Volatility may remain elevated in 2019, but investors are often best served by remaining calm and maintaining a long-term perspective.

Past results are not predictive of results in future periods.

Our latest insights

Hear from the investment team.

Don't miss out

Get the Capital Ideas newsletter in your inbox each week


Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants' plan provider or employer.

All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.

Use of this website is intended for U.S. residents only.

American Funds Distributors, Inc., member FINRA.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.