A Bear Market is defined as an index dropping at least 20% from some previous high. Smaller drops in the market between 10% and 20% are called “corrections.” Larger drops of at least 50% are called a “crash.”
As of the publication of this article and since 1950, there have been exactly nine Bear Markets in the S&P 500 Price Index (the most common representation of “the market”). Only one of these turned into a stock market crash. The other eight stopped dropping before the loss from peak to bottom was greater than 50%.
I have gradually been writing a series of articles on each Bear Market to show how quickly they correct and how high the subsequent Bull Market rises. Bear Markets are not uncommon and also nothing to be feared.
The stock market is inherently volatile, but it is also inherently profitable. Everyone would want to have invested as much as possible 30 years ago, even knowing all the so-called crises. Long term investing erases all this short term volatility.
Don’t let your fear of the future ruin your future.
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