A history of bull markets in one Morningstar chart. pic.twitter.com/y1SEd4xeHk
— Jerry Kerns (@jerrykerns) May 6, 2014
I love this chart.
Blow it up, print it out and study!
Jerry created the chart to show nearly a century of bull markets but what caught my eye was the nature of the eight bear markets.
- Duration of 3 to 34 months
- Scale of loss (peak to trough) of 22 to 84%
If you’re an investor then it’s important to realize that it is perfectly normal that you’ll get crushed once a decade. Knowing that it’s normal won’t make it hurt less, but it might make you realize that your pain is temporary.
Personally, my worst bear market was 2008. It was a doozy.
In the space of six months:
- my family’s net worth fell 65%
- I lost my job
- My dependents doubled
- I discovered that my (joint & several) partner was involved with fraudulent activity
- I was exposed to the risk of civil prosecution
I share this story to help you remember that THE world isn’t ending when YOUR world collapses.
Setbacks are part of life and my making it 20 years without a major financial setback was abnormal. In fact, I had several setbacks along the way (15% hits) that I’d forgotten.
Save the chart for a rainy day and I’ll retweet at the next recession.