Bear Markets & Staying the Course

April 7, 2025

“History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” – Shelby M.C. Davis

Being a successful investor in the stock market requires mental fortitude, patience, and persistence. There’s no reward without taking on a level of risk. Markets do not rise in a smooth, linear fashion, which means we are subject to volatility along the journey.

If you haven’t yet, you’ll likely begin seeing mentions of “bear market” in the news cycle. A bear market is defined as a roughly 20% dip in prices from an all-time high, which both the NASDAQ (-22.7%) and Russell 2000 (-25.1%) have entered as of Friday’s closing bell. The S&P 500 (-17.4%) and Dow Jones (-14.9%) aren’t far behind and could join as early as today.

According to Ned Davis Research, the average length of a bear market is 289 days (9.6 months) while the average length of a bull market is 965 days (2.6 years). Stocks lose 35% on average in a bear market. By contrast, stocks gain 111% on average during a bull market.

"The four most dangerous words in investing are, it’s different this time." — Sir John Templeton

The global market is currently grappling with the possibility of a trade war, which would be disruptive to economic growth. Global markets have grappled with many events throughout history that felt different in the moment — from world wars, to pandemics, to inflation, to sector crises, and everything in between.

We already know that investors are terrible at predicting the future, so let’s look at the past to gain a sense of what has previously happened after large market dips.

The S&P 500 fell 10% in just two days last week. That has only happened four times in history:

• October 16th and 19th, 1987 (-24.6%)
• November 19th and 20th, 2008 (-12.4%)
• March 11th and 12th, 2020 (-13.9%)
• April 3rd and 4th, 2025 (-10.5%)

The last three times this happened, here are the next 5 years of returns:

• October 19th, 1987 to October 19th, 1992 (+84.6%)
• November 20th, 2008 to November 20th, 2013 (+137.6%)
• March 12th, 2020 to March 12th, 2025 (+124.6%)
• April 2025 — ??

"The investor's chief problem – and even his worst enemy – is likely to be himself." – Benjamin Graham

Decoupling emotion from your investment plan is critical to continued growth over the long-term.

Three core tenets of a successful investor include diversified asset allocation, low fees, and sound behavior. With One Day In July, those first two tenets are accomplished as soon as you become a client. The third requires continued discipline, and that's why we're here.

Now is not the time to panic. The desire to “time the market” is a behavioral error that can lead to a loss of performance over the long haul. If timing the markets were a successful approach, we would see many people doing it successfully, but we do not, particularly in the long term.

As my colleague Hans Smith has previously written about, if you’re able to tune out the noise and focus on the things you can control — stay invested, collect dividends, rebalance the portfolio, and tax harvest where appropriate — investment success will likely follow.

- Chris McKeown

1. Ned Davis Research: https://www.ndr.com/hs/home
2. Yahoo Finance: https://finance.yahoo.com/quote/%5EGSPC/history/