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The Decline and (Nascent) Bounce—in Pictures
An interesting tidbit: The 11 trading days between Friday, 13 March 2020, and Friday, 27 March 2020, represented the fastest shift in market history from bull market to technical bear market and back to bull market. The next closest was in 1929 but wasn’t particularly close—18 days. (HT: Morgan Stanley)
Here’s how this downturn has looked relative to historical downturns in S&P 500® Index price terms (we use the S&P 500® Index because it has a longer history than most other indices and is generally a decent proxy for market movement). The lines on the chart represent roughly the 20 biggest market declines back to 1929, indexed to 100 as of the market peak. The horizontal axis represents the number of days since the peak. (It’s worth noting not all these downturns would strictly be considered “bear markets,” given some were particularly short in duration. And economic and market historians could no doubt quibble with some of the precise dates used, but the shape of the charts is our primary point.)
Exhibit 1 shows the downturns’ full duration. February 2020 – March 2020 is represented by the thicker, dark green line.
Exhibit 1: S&P 500® Index Price Return, Indexed to 100, Peak to Trough
Exhibit 2 shows just the first 24 days (which is how long—thus far—the most recent downturn lasted). Again, the current downturn is the thicker, dark green line.
Exhibit 2: S&P 500® Index Price Return, Indexed to 100, First 24 Days of Historical Declines
And finally, the first six days of the ensuing bounce—which is in no way to suggest the market couldn’t turn around and resume its decline. But the recent bounce has been notably sharp, nonetheless.
Exhibit 3: S&P 500® Index Price Return, Indexed to 100, First 6 Days of Historical Upturns
Again, none of this is to suggest past is prologue. Or that this current downturn is over—it may not be. Even with the recent historic bounce, this remains one of the sharpest market declines on record. Only time will tell whether this period winds up breaking other records (and which ones).
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