When does a bear market end?

[jeroly]

If the S&P 500 index closes at its current value (2750) it will be less than 20% below its all-time high of 3393.52 (and 18.8% below its all-time closing high of 3386.15).

Will this be considered the end of the bear market, or will we need to reach a new closing high before the bear market is considered to be over?

[IsThisAGoodUsername]

https://www.investopedia.com/terms/b/bearmarket.asp

[jeroly]

https://www.investopedia.com/terms/b/bearmarket.asp

LOL

I didn't ask what the definition of the start of a bear market is.
I asked what the definition of the end of a bear market is.

Your link does not even attempt to answer the question.

(Moreover, I believe that there's not actually a right answer to the question.  It was mostly rhetorical to stimulate discussion.  I asked it primarily to gauge sentiment on the forum as to whether we are back on track or not...)

[IsThisAGoodUsername]

Yeah, I just did a quick copy/paste without even reading the article.  You got me. :)

But it kinda doesn't matter. If you're a new investor and you enter at the bottom of the market, any market gains are good for you even if it's still Bear for everybody else.

Bear is a somewhat arbitrary description. Depending on your holdings, you may still prosper even in a Bear market. Especially if we include options and other speculative instruments.

[Monkey Uncle]

Try this one on for size: https://www.investopedia.com/terms/b/bullmarket.asp

"the most common definition of a bull market is a situation in which stock prices rise by 20%, usually after a drop of 20% and before a second 20% decline. "

So the bear market may end at the bottom, but that end is only apparent after prices have risen 20% from the bottom.

[jeroly]

Try this one on for size: https://www.investopedia.com/terms/b/bullmarket.asp

"the most common definition of a bull market is a situation in which stock prices rise by 20%, usually after a drop of 20% and before a second 20% decline. "

So the bear market may end at the bottom, but that end is only apparent after prices have risen 20% from the bottom.

So by that definition we're already in a new bull market?

[Monkey Uncle]

Try this one on for size: https://www.investopedia.com/terms/b/bullmarket.asp

"the most common definition of a bull market is a situation in which stock prices rise by 20%, usually after a drop of 20% and before a second 20% decline. "

So the bear market may end at the bottom, but that end is only apparent after prices have risen 20% from the bottom.

So by that definition we're already in a new bull market?

Yep, as of today's close, we're up 22.9% off the March 23 low.

Not that I believe that for a second.  Arbitrary rules are pretty much meaningless.

[Buffaloski Boris]

Technically, the bear market ended today.  Now personally I don't believe that this new "bull" market will hold.  We will see soon enough.

[Viking Thor]

There are divergent opinions on when a bear market ends. A lot of people say a new market high is required.

By that definition we are still almost 20% shy of ending the bear market.

[The_Big_H]

There are divergent opinions on when a bear market ends. A lot of people say a new market high is required.

So... I guess Japan is going on a 30+ year bear.

[Gremlin]

Technically, the bear market ended today.  Now personally I don't believe that this new "bull" market will hold.  We will see soon enough.

The end of a bear market is only evident in hindsight.  The Dow had several significant rallies during the Great Depression, but very few people would suggest that the period 1929 to 1932 was categorised by five or six short bull markets interspersed by six or seven short bear markets.

[Monkey Uncle]

Technically, the bear market ended today.  Now personally I don't believe that this new "bull" market will hold.  We will see soon enough.

The end of a bear market is only evident in hindsight.  The Dow had several significant rallies during the Great Depression, but very few people would suggest that the period 1929 to 1932 was categorised by five or six short bull markets interspersed by six or seven short bear markets.

That's the difference between the long-term, or "secular" bull/bear markets and the cyclical bulls/bears that are contained within them.  A secular bear market existed at least from October 1929 through about June 1932.  A couple of strong rallies in the 20% range occurred on the way down.  Those could be considered cyclical bulls within the longer-term down trend. 

Of course it's all a matter of scale.  You could take the viewpoint that the market was in a secular bear market from October 1929 until June 1949.  None of the high points within that time frame came close to the 1929 high, although none of the low points after 1932 were as low.  Taking this point of view, the 4 1/2 year bull market from June 1932 until January 1937 was just a cyclical bull contained within the longer term secular bear market.

Similarly, the market is often said to have been in a secular bull market from August 1982 until March 2000.  A cyclical bear market occurred from August through November 1987.  Using these kinds of time scales, a secular bear existed from March 2000 until March 2009, with an imbedded cyclical bull from Sept 2002 until October 2007.

Of course these are all analyses that are done in hindsight.  They can't be done in real time, and thus are not actionable.  Hence why long term buy and hold strategies typically outperform attempts to time the market.

[Viking Thor]

There are divergent opinions on when a bear market ends. A lot of people say a new market high is required.

So... I guess Japan is going on a 30+ year bear.

Sure, you could say that. Would you want to have your money invested there for the last 30+ years?

The definition is kind of arbitrary but 20% gain off the low seems very weak. Let's say the market is at 100, drops to 50, goes back up to 60, and then just trades in that range for a while ie 55-65 for several years. Does that seem like a bull market? There's no clear definition but a lot of people wouldn't think so.