S&P 500 Bear Market (-20%)
Entering a textbook bear market
A 20% drawdown from peak is the conventional bear-market threshold. Since 1929, there have been approximately 14 bear markets, occurring roughly once every 5-7 years. Duration and depth vary enormously.
| Date | 1M return | 1Y return | 5Y return |
|---|---|---|---|
| 1929-10-28 | -7.9% | -25.5% | -59.8% |
| 1933-04-21 | +16.1% | +47.0% | +32.4% |
| 1937-09-07 | -10.4% | -15.5% | -41.5% |
| 1940-05-14 | -5.6% | -9.2% | +43.0% |
| 1942-06-10 | +5.6% | +42.5% | +81.3% |
| 1946-09-03 | +0.0% | +0.9% | +57.5% |
| 1949-06-13 | +9.1% | +40.0% | +117.2% |
| 1957-10-21 | +2.0% | +31.0% | +40.4% |
| 1962-05-28 | -5.2% | +26.1% | +63.0% |
| 1966-08-29 | +3.5% | +24.6% | +34.2% |
| 1970-04-22 | -14.4% | +22.9% | +3.5% |
| 1973-11-27 | +2.1% |
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
The 2020 bear lasted 33 days (fastest ever). The 2007-09 bear lasted 517 days. The dot-com bear lasted 929 days. One number (-20%) masks enormous variation.
Reaching -20% tells you nothing about whether the market will fall to -25% or -50%. The distinction between 'correction' and 'bear' is a media construct, not an analytical tool.
Reinvesting dividends into a declining market buys more shares at lower prices. This 'acceleration effect' means bear markets actually boost long-term terminal wealth for net savers.
Median 3-year annualized return from the -20% threshold is approximately +15% per year. The worse it feels, the better the forward opportunity.
Once a bear market is official, review the sequence of your spending: withdrawals should draw on cash and short-term bonds so depressed equities are never the forced source. Confirm dividend reinvestment stays on, too — reinvested payouts buy more shares at lower prices, which is precisely how bear markets have historically boosted long-term wealth for net savers.