Learn From the Past or You're doomed to repeat it

Many individuals are concerned when they are stricken by a “Bear Market Blooming” media headline. This can lead to feelings of fear or even worry. With these emotions piling up, some feel they need to prepare for this so-called bear market, when in reality they are reacting.

Why? Because Your Emotions Drive Your Actions, and These End-Of-The-World Media Headlines Stimulate Worry and Fear

But what if these bear markets weren’t that bad? What if they aren’t as uncommon as we have heard? What if you realized we have seen almost all types of reasons for a bear in our history and have always come out on top? Well, they aren’t uncommon. Every crisis we have had thrown at us, we have been able to survive and thrive, and they aren’t that bad. This may seem like an optimistic statement, but the facts are facts - and facts don’t lie.

Below are the facts- as history has provided about Bear Markets:



*Nick Murray – Bear Markets History 2021

Hopefully, the chart reveals their utter commonness. There have been sixteen bear markets since the end of WW2. This will average out to about one every five years with an average drop off about -30% - and they do last about thirteen months.

As you can see, during the first bear market in May of 1946, the S&P peaked at 19.3. As I write these words today, towards the end of May 2022, the S&P 500 is at 4,158.

What can be learned from this chart is simple.

  1. Since the end of World War II, we have had 16 of these potentially capsizing financial waves hit us as investors (our industry refers to them as Bear Markets).
  2. These average out to about one every five years with the average drop of around 30%, with the duration being about 13 months.
  3. So far, each new market peak is above the prior market trough - that means we did not sink.
  4. Every crisis above we have had thrown at us, we have been able to survive and thrive. As Chris Davis of Davis Advisors has said, "Crises are a painful but inevitable part of the investing landscape."
  5. Since the market peak of our first event in 1946, the market has gone up over 190 times (not including dividends) as of November of 2020.
  6. While the ups and downs of the market move in cycles, the declines (market troughs) have not eclipsed the advances (market peaks). This brings us to our historical conclusion: All declines have been temporary, and all advances have been permanent.

The information provided is illustrative, for educational and informational purposes only, does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. 

Past performance is not indicative of future returns.

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

All investments include a risk of loss that clients should be prepared to bear. The principal risks of Melone Private Wealth strategies are disclosed in the publicly available Form ADV Part 2A

Melone Private Wealth, LLC (“MPW”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where MPW and its representatives are properly licensed or exempt from licensure.

*Nick Murray – Bear Markets History 2021. 

Markets defined as S&P 500 Index. 

The Book

The Book

Unpack Your Financial Baggage explains the complexities of financial planning using simple language, easy to understand charts, and even quantifies the value of using a financial planner. Lou’s 25 years of financial planning experience is the inspiration for a conversation between a couple and their financial planner throughout the book.

Learn more
The Podcast

The Podcast

This new financial planning podcast helps answer a fundamental two part question ‘will you outlive your money, or will your money outlive you? …And the answer comes down to having a plan and understanding behavioral investing.

Learn more