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Market Performance From March 9 – Further analysis of bear market
On March 9, 2009, the Dow Jones industrial average closed at 6547.05.
Today, April 7, 2009 the Dow Jones closed at 7789.56 – almost 19% higher.
The current slide meets my criteria for post in our blog (short and easy to understand), and shows some interesting information about every bear market since 1900.
target = "_blank" title = "table"> This slide courtesy of Wachovia Securities, reinforces many of our previous blogs. In the past, bear markets have been followed by strong returns in the next 12 months. Since the Second World War, for example, the average return for the Dow Jones was 29.6% one year after the bear market low.
We believe it is impossible to accurately pick "from below, so I do not mean to imply that it was on March 09th or lower than next twelve months from a low behave the same as in the past.
You can not tell if it was down to 12 months later – but is there to hope it was!
Here is a summary of notes slide:
Measured by the Dow Jones since 1900, the stock market through its current market down 25. In the diagram defines a bear market using the conventional industry definition of a 20% decline from peak to trough. The decline of 1956-1957 was excluded because of the proximity to the definition of 20%.
The 24 completed down markets had an average decrease of -36.7% And an average duration of 15.3 months. Post World War II, have completed 11 bear markets with an average decline of 29.3% and 13.4 months. From the level of closure March 9, 2009, the current bear market that began in October 2007 has declined -53.8% and lasted 17.2 months.
The statistics summarized in the bottom of the table show a slight tendency to down markets in recent history to fall less and are shorter. We believe this trend has been caused the explosion of financial information across multiple sources of information media, the most important Internet information is received and discounts much faster than in the past.
The current bear market now ranks as the second biggest decline since 1900, surpassed only by the -86% decline during the Great Depression.
Progress has been made after an absence of sharp bear markets. In the 24 completed runs from the year 1900, the Dow Jones has an average increase of 41.7% over the next 12 months. The last three bear markets have been followed by an increase of 27.7%.
Of course, above results we can not guarantee future results.
About the Author
As co-founder of Chappell, Mayfield & Associates, Cass offers expertise in financial planning, wealth accumulation, retirement planning, insurance planning, business continuation planning, and employee benefits.
Cass launched his financial planning career as an agent for Prudential Financial in 1996, and later, a manager in the company’s financial services division. Since then, Cass has earned the CFP®, CLU, and ChFC designations, reflecting his commitment to excellence in investment decision-making and financial planning. He also holds a B.S. in Management from Georgia Tech.
Cass has lived in Atlanta since 1992 and is married to Alison.
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