Worrying Records

Source: Pixabay

« The S&P 500 has entered the longest period since 1929 without a correction of more than 5%. » While this might entail a sigh of admiration to many investors, this kind of observation (per Goldman Sach’s report published today by their equity strategy team, entitled « Correction Detection; the risks of a drawdown within a bull market ») is a source of worry to us.

Per GS’s report, the average bear market since 1945 has been a 30% fall in equity prices over 13 months, with a recovery that lasted 22 months (in nominal terms), while the average « bull market correction » has been 13% on average, lasted 4 months and recovered after 4 months.

The following table gives some historical perspective on bear markets in the US: