Market Correction vs. Bear Market
- October 2018 was a spooky month. The S&P 500 Index once again entered correction territory as it declined -10% from its peak during the summer. The continued pattern of declines again raises the question: Is this the beginning of a bear market? Of course, not all corrections turn into bear markets. Data from the Schwab Center for Financial Research shows that there have been 22 market corrections since 1974; only four of them, occurring in 1980, 1987, 2000 and 2007, eventually ended up as bear markets.
- No bull market lasts forever, but bull markets have historically lasted much longer than bear markets. Since 1926, the average bull market for the S&P 500 Index has lasted 9.1 years with an average cumulative total return of 480%, while the average S&P 500 bear market period lasted only 1.4 years with an average cumulative loss of -41%.
- Economic conditions remain strong in the U.S. As such, investors should take advantage of the strong economy to prepare for the inevitable bad economy – whenever it occurs.
The information contained in this presentation does not purport to be a complete description and is intended for informational purposes only. Any opinions are those of the content creator and not necessarily those of the named advisor(s), JWC or JWCA. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.