History Says All Bear Markets Have 1 Trait in Common -- and It's Fantastic News for Investors
John Bromels, The Motley Fool
Sat, August 29, 2026 at 5:40 PM GMT+3 4 min read
Investors are getting nervous, and it's easy to see why.
A number of bear market indicators are flashing red right now. According to the Buffett Indicator, named for legendary investor Warren Buffett of Berkshire Hathaway, the market is historically overvalued.
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Meanwhile, the American Association of Individual Investors reports that 44.4% of individual investors are expecting a bear market in the next six months, far more than the 32.9% predicting a bull market. That's a 4.5 percentage point jump in the bear-predicting cohort in the past week alone.
But even if a bear market arrives tomorrow -- and, remember, there's no way to know exactly when a bear market's coming -- history has some good news for investors.
Every bear market in U.S. history has had one trait in common. Here's what it is and how you can use it to your advantage.
Bear markets are shorter than bull markets
A bear market is defined as a drop of more than 20% in a broad-market index such as the S&P 500, which is the one that's most commonly used to gauge the health of the U.S. market. But even the worst bear markets in U.S. history -- from the steepest (the Great Recession's 56.8% decline) to the longest (the 31-month bear that followed the bursting of the dot-com bubble) -- have been followed by an even longer bull market. And it's often a much, much longer one.
The record-long bear market that followed the dot-com crash, for example, lasted (from peak to trough) 31 months from March 2000 through September 2002. But it was followed by a 60-month (5-year) bull market that lasted until October 2007.
Then we had the Great Recession's 17-month bear market, which lasted until March 2009. That was followed by the longest bull market in history, which lasted almost 11 years until the one-month COVID-19 bear market of February 2020.
In other words, since the S&P 500 was created in 1957, the stock market has been in a bull market most of the time. We've only had about 12 total years of bear markets compared to about 57 total years of bullish reign.
Bull market gains crush bear market losses
By definition, every one of those bull markets has returned more than the preceding bear market lost.
The great news for investors is that bull markets usually return at least double what the preceding bear market lost. Of the 13 bull markets since the S&P 500 was created, only one (1966-1968) has returned less than 1.9x the preceding bear market's losses.
But sometimes the returns are much, much higher. The 1982-1987 bull market, for example, returned 9x the losses of the preceding 1980-1982 bear market. The 1990-2000 bull market returned a jaw-dropping 21x the 1990 bear market's losses!
So, the good news for investors is that if we do find ourselves in a bear market, history says it's likely to be relatively short-lived. History also says that investors who kept their money invested in the S&P 500 during a bear market have always gone on to recoup all their losses and usually notch substantial gains once the bear market ends.
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John Bromels has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
History Says All Bear Markets Have 1 Trait in Common -- and It's Fantastic News for Investors was originally published by The Motley Fool
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