Understanding Bear Markets: What You Need to Know

What Is a Bear Market?

A bear market is defined as a decline of 20% or more from recent market highs. While they can feel unsettling, bear markets are a normal and expected part of long-term investing.

Over the past 94 years:

• Markets have spent about 78% of the time in bull markets (growth periods)
• Only about 21% of the time has been spent in bear markets

Bear markets tend to be shorter-lived than bull markets:

• Average bear market length: 289 days (just under 10 months)
• Average bull market length: About 1,000 days (nearly three years)

The historical pattern shows that staying invested during bear markets has often benefited those focused on long-term goals.

Do Bear Markets Always Lead to Recession?

Not necessarily. While bear markets are often linked with economic slowdowns, a bear market doesn’t always predict a recession.

There have been several recessions without corresponding bear markets — and bear markets that happened without triggering a recession. It’s important to separate market volatility from broader economic conditions when planning your next moves.

What Should I Do With My Investments During a Bear Market?

If you’re wondering how to handle investments during a bear market, here are some key strategies:

• Stay the course: Historically, selling during downturns can lock in losses. Staying invested — even when markets are volatile — has typically led to better outcomes.
• Review your financial plan: Make sure your current investment strategy aligns with your risk tolerance, time horizon, and goals — especially if your personal situation has changed recently.
• Consider new opportunities: Bear markets can offer the chance to invest in quality assets at lower valuations, depending on your individual needs and objectives.

Strategies for Those Nearing or In Retirement

If you’re approaching retirement or are already retired, a bear market can have bigger implications for your income and long-term security. Here are some tips:

• Maintain liquidity: Keeping 6–12 months’ worth of living expenses in cash or near-cash reserves can help you avoid selling investments at a loss.
• Adjust withdrawal strategies: Flexible withdrawal plans can help protect your portfolio and ensure that your retirement income stays sustainable through market volatility.

College Planning During a Bear Market

Parents saving for college also need to think carefully during market downturns. Some smart steps include:

• Review your portfolio: As college approaches, consider shifting to a more conservative investment mix to protect upcoming withdrawals.
• Plan withdrawal timing carefully: Match tuition payments with lower-risk holdings to reduce exposure to market swings.
• Stay focused on your goals: Even when markets are down, consistent long-term investing remains key to funding your child’s education.

Final Thoughts

Market volatility can feel unsettling — but having a thoughtful strategy for navigating bear markets can help keep your long-term goals on track.

If you’d like to discuss your investment plan or explore strategies to help you weather this market cycle, we’re here to help.