Financial Planning Fridays #39: Preparing for the Next Bull Market

We have now been in a bear market for 11 months. In October of 2022, the S&P 500 was down more than 25% after making a new high in the preceding January.

It goes without saying that bear markets are not fun to go through; however, if navigated properly, they can be an excellent time to reposition your portfolio in preparation for the next bull market, which is often right around the corner.

And though it may not feel like it, bull markets usually last longer than bear markets, and they often return many multiples of the temporary decline of the preceding bear market.

Let’s review how long every bull and bear market has lasted since 1926.

The average bear market has lasted 20 months, although it often feels like forever when going through it. The average bull market, however, has lasted 51 months – about two and half times as long! And not only have bull markets persisted longer, they have returned almost four times as much on average.

Now let’s review the total returns of each bull and bear market since 1926.

During the average bear market, the S&P 500 lost 41%, while during the average bull market, stocks have gained 162%. Every bear market since 1926 has eventually been followed by an even more powerful bull market that has not only made up the temporary loss but gone on to have significant gains on top of that.

We don’t know when this current bear market will end; no one does. However, looking at this historical data, we at Presilium are confident that a new bull market will begin soon enough and that the returns will be significant. As important as it was for us to be prepared coming into this time, it is equally important that we are well prepared to take advantage of the next market move up as this will provide the returns needed to reach our client’s financial goals.

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