Long Bull & Short Bear

Long Bull & Short Bear

October 21, 2022

Bulls and bears are iconic figures on Wall Street. Most of us have pictures of them on our walls or little figurines on our desks. Funny thing is, they’re almost always the same size. But bull and bear markets have fairly distinct patterns, especially in terms of how long they last.


Take a look at this chart from our friends at First Trust Portfolios:


 You can click on the image to enlarge. (https://www.ftportfolios.com/Commentary/Insights/2022/10/3/markets-in-perspective-client-resource-kit---third-quarter-2022)


It shows the average length of bull and bear markets and, as you can see, bull markets are typically much longer than bears; 4.4 years for bulls vs. 11.1 months for bears.


Also, notice the gray vertical lines that indicate recessions. The National Bureau of Economics has yet to officially call the current period a recession but the chart shows that most bear markets accompany recessions.


As we noted back in May, the market is a leading economic indicator. Much of the data we look at tells us what has already happened. This includes earnings reports, unemployment numbers and hiring stats and those pesky inflation measures. But the direction the market takes tells you more about what may happen than what has already transpired. With this market decline starting in late 2021 or early 2022 depending on the metric, this bear is starting to get a bit long in the tooth compared to the average. Of course, averages don’t predict the future.


And we like to tell clients we don’t predict market moves but we do observe. Our observation is that at some point the market will begin to predict economic recovery. We are ready.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.


The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.