Bulls, Bears & Cycles
Market cycles, corrections, crashes, and recoveries
In ninety-nine years of recorded U.S. stock market history, the market has crashed at least once a decade, sometimes more.
It has also, at least once a decade, recovered fully and gone on to set new all-time highs. Every major decline in living memory — 1929, 1973, 1987, 2000, 2008, 2020, 2022 — has, with the patience required, eventually been forgotten by the index. Understanding that this is the rule, not the exception, is the single most important lesson for any investor with a horizon longer than a few years.
The math is unambiguous; the discipline is hard. A bull market is a sustained rise of 20% or more from a recent low. A bear market is a sustained 20%+ decline from a recent high.
A correction is a smaller 10-20% decline. Bull markets in U.S.
equities since 1950 have averaged about five years and gained roughly 175%.
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 9 sections and ends with 5 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1The drawdown calendar — what to expect
- 2Time in the market vs timing the market
- 3S&P 500 Crash & Recovery Timeline
- 4Every major U.S. equity decline since 1950 — the price of admission
- 5The cost of missing the best days — $10K invested 2003-2023
- 6The arithmetic of drawdowns and recoveries
- 7The worst possible timing — $10,000 on January 1, 2008
- 8Where to see this on the platform
- 9Summary