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Bear market: What is the significance and how to navigate it

On June 13, 2022 the S&P officially hit a bear market. The beginning of the bear market was around the new year and the nearly 20% drop was marked at the closing bell of June 13 at 3,749.63. We took a look at further details and broke down what it is, how to navigate it and more.

Video Transcript

- We're talking about bear markets because a sharp decline in stocks meant that the S&P officially entered one. 20% drop. That's measured from market peak to market bottom. Beginning of the bear market was around the new year, when we were celebrating bringing in 2022. And the 20% drop was marked once we broke at the close yesterday 3749.63.

What is the significance of a bear market? And we don't know when we've exited a bear market until we see the bottom. Now, of course, how do we know that? Are we at the bottom right now? Well, we won't know until we get a bounce back of another 20%. That's when we can declare that we have seen the bottom.

These are the last three bear markets right here. We are looking at March 2000, October 2007, the Great Financial Crisis, and the February 2020 market that was triggered by the pandemic. The longest one that we had seen was actually in the 2000s. That was almost two and a half years. And the most recent bear market that was triggered by the recession, it only lasted about a month and change.

Right now, because it's too early to call the bottom and we would need to wait for it to bounce back first, we've lost about 21.8%. It has lasted about 5.3 months so far. But of course, Akiko, history will bear out exactly how long this bear market lasts.