How long do bear markets typically last?

Since 1929, the average S&P 500 bear market has lasted approximately 9 to 16 months, depending on measurement methodology. However, individual bear markets have varied widely — the 2020 COVID crash lasted only 33 days from peak to trough, while the 2007–2009 bear market lasted 17 months. The average decline has been roughly 30% to 36%.

What is the difference between a bear market and a correction?

A correction is a decline of 10% to 19.9% from a recent high, while a bear market is a decline of 20% or more. Corrections are more frequent and shorter-lived, occurring roughly once every 1 to 2 years on average. Not every correction develops into a bear market.

Should I sell everything in a bear market?

Selling everything during a bear market locks in losses and creates the challenge of timing when to reinvest. Historical data shows that missing just the 10 best trading days over a 20-year period can cut your returns in half, and many of those best days occur during or immediately after bear markets. A better approach for most investors is to maintain their long-term asset allocation and continue regular contributions.

Bear Market

By WikiWealth Editorial Team|Last updated: March 30, 2026

Key Takeaways

A bear market is defined as a decline of 20% or more from recent highs in a broad market index
The average bear market lasts about 9 to 16 months, significantly shorter than the average bull market
Bear markets are often triggered by economic recessions, rising interest rates, or financial crises
Defensive strategies include diversification, holding cash reserves, and focusing on quality dividend-paying stocks

Definition

A bear market is a condition in which securities prices fall 20% or more from recent highs, accompanied by widespread pessimism and negative investor sentiment. The term is most commonly applied to stock market indices such as the S&P 500 or the Dow Jones Industrial Average, but it can apply to any asset class including bonds, commodities, or real estate.

How It Works

Bear markets typically unfold in phases. First, prices begin declining from highs as early sellers take profits. Second, selling accelerates as economic data deteriorates and corporate earnings disappoint. Third, panic selling drives prices sharply lower as fear dominates. Finally, a bottoming process occurs as bargain hunters step in and sentiment reaches extreme negativity. The National Bureau of Economic Research does not officially declare bear markets — the 20% threshold is a widely accepted convention among market participants. Bear markets are closely associated with recessions, though not every bear market accompanies one.

Example

The 2007–2009 bear market during the Global Financial Crisis saw the S&P 500 decline approximately 57% from its October 2007 peak to its March 2009 trough. An investor with a $500,000 portfolio at the peak would have seen their holdings drop to roughly $215,000 at the bottom. However, an investor who continued dollar-cost averaging throughout the downturn and held through the recovery would have recouped their losses by early 2013 and seen substantial gains thereafter.

Why It Matters

Bear markets test investor discipline and expose portfolios that are not properly diversified. Understanding bear markets helps investors set realistic expectations, maintain appropriate asset allocations, and avoid panic selling at the worst possible time. Historically, bear markets have also created some of the best long-term buying opportunities for patient value investors.

Advantages

Create buying opportunities for long-term investors who can purchase quality assets at discounted prices
Expose overvalued or fundamentally weak companies, improving market efficiency
Encourage more disciplined risk management and portfolio construction
Often precede strong recoveries that reward patient investors

Limitations

Can cause significant financial and emotional stress for investors, especially retirees
Timing the bottom is virtually impossible, even for professional investors
May last longer and go deeper than historical averages suggest
Can trigger forced selling through margin calls, compounding losses

Frequently Asked Questions

Related Terms

Bull Market Recession Diversification

Browse more definitions in the financial terms glossary.