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A bear market for the record books

Bear markets come and go, but this is already one for the record books. It has fallen faster and deeper than most, vaporizing more than $10 trillion in wealth and the equivalent in investor confidence. It's being compared to the Great Crash of the early 1930s, though it has yet to plumb those harrowing depths. Was last week's rally a sign that it hit bottom? What will recovery look like?

1929-32 The most famous bear market, which helped usher in the Great Depression. After a near decadelong run-up, the Dow hits a high of 386 in 1929, only to fall to a low of 40.5 in 1932, an 89 percent plunge. The three-year run includes more than a third of the most volatile trading days in the modern Dow's history. It takes until 1954 — 22 years — for the Dow to reach its previous high.

1973-74 The first major bear market since WWII. The Watergate scandal, an Israeli-Arab war and an oil embargo conspire to send the country into a recession. Inflation tops 10 percent. It takes until 1982 for the Dow to recoup its losses.

2007-09

The Dow peaks at 14,164 on Oct. 9, 2007. The bear picks up speed on the news that venerable Lehman Bros. is filing for Chapter 11 bankruptcy. Further erosion of the banking sector and more grim economic news drive the Dow into the 6,000s. The current bear market includes the Dow's largest one-day point loss (778), largest intraday range (1,019) and the largest one-day point gain (936).

1981-82

2000-02 The dot-com bubble bursts after the Dow peaks at 11,750 in January 2000. Accounting scandals at companies like WorldCom and Enron prolong the downturn, which is accompanied by a brief recession. The Dow bottoms out at 7,286 in October 2002 and takes four years to climb back to its previous high.

1946-49

1956-57

1968-70

average

1966

1939-42

Here is a comparison of bear markets since 1929. A line's movement to the right reflects the Dow Jones Industrial Average's time in decline. Its movement downward shows the decline in value before the market turned around.

0% price Decline

-50%

-80%

1952-53

1959-60

1 year

-20%

1961-62

. years spent declining, bear market peak at bottom

2 years

3 years



1937-38 Compared with the early 1930s, this is a tame bear. Still, a recession cuts the value of the Dow nearly in half in just over a year. It isn't helped by European countries raising taxes to fund war efforts. The recovery is quickly followed by another, though less severe, bear market that begins in 1939.

A bear market for the record books 03/14/09 [Last modified: Sunday, March 15, 2009 4:29pm]

    

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