Bear Markets Without Recessions – It’s a thing

Can you have a bear market for stocks without an accompanying recession? It’s not terribly common, but it does occur from time to time. Burt White, Chief Investment Officer at LPL, names three reasons why it’s happened in the past: Policy mistake (raising rates in 1976), financial crisis (Asian currency mess / LTCM blow-up in 2008) or excessive speculation (Crash of 1987).

What’s kind of funny but not so funny is that the bears are alleging all three of these things are occurring right now – policy error by Yellen in raising too soon and Japan for cutting to negative rates, financial crisis in EM countries as a result of it, and excessive speculation in venture capital, FANG stocks and high yield credit.

Here’s Burt White with some history and a great table…


Bear markets can occur without recessions. Going back to 1968, ten bear markets have occurred with six accompanied by recessions [Figure 1]. The accompanying figure shows just how much more painful bear markets are when they are tied to recessions. In the six recessionary bear markets since 1968, the average peak-to-trough S&P 500 decline was a whopping 39%. The thought of such a decline when compared to where we are now, 11.6% below the May 21, 2015 record high, could make your stomach churn.

bear recession

Josh here – the base case I’ve laid out about the current situation – a cyclical bear market driven by oil bankruptcies two years into the secular bull market that began in 2013 – has a precedent. It happened in 1984, although the S&P bottomed out some 14% lower instead of the requisite 20% that marks a typical bear market.

If what we’re experiencing today is anything like that, we’re not quite through the worst of it. Skeptics would point out that the ’84 bear market was arrested in its tracks that summer by a Fed rate cut. Not actually an option this time 🙁


What a Non-Recessionary Bear Might Look Like
LPL – February 9th, 2016


This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Save us Janet! | Vestact's – Quirk with quark commented on Feb 11

    […] Brown ask the good question – Bear Markets Without Recessions – It’s a thing. The US market is unlikely to go into a recession this year. Our own economy is more likely to go […]

  2. Sunday Reads | SCOTT'S INVESTMENTS commented on Feb 21

    […] Bear Markets Without Recessions – It’s a thing Two great reads on portfolio construction Tactics won’t matter when your strategy sucks […]

  3. click here commented on Sep 14

    … [Trackback]

    […] Info to that Topic: […]

  4. blazing trader commented on Sep 28

    … [Trackback]

    […] Information on that Topic: […]

  5. bitcoinloophole commented on Oct 03

    … [Trackback]

    […] Read More on that Topic: […]

  6. 먹튀사이트 commented on Oct 07

    … [Trackback]

    […] Find More Info here on that Topic: […]

  7. fun88 commented on Oct 13

    … [Trackback]

    […] Find More on that Topic: […]

  8. Quality Engineering commented on Nov 11

    … [Trackback]

    […] Read More on to that Topic: […]

  9. RPA in software testing commented on Nov 12

    … [Trackback]

    […] Read More Information here on that Topic: […]

  10. Intelligent Automation services commented on Nov 27

    … [Trackback]

    […] Read More here on that Topic: […]

  11. 토토사이트 추천 commented on Dec 09

    … [Trackback]

    […] Info on that Topic: […]

  12. rolex replica commented on Dec 31

    … [Trackback]

    […] Information on that Topic: […]

  13. Digital Transformation journey commented on Jan 16

    … [Trackback]

    […] Read More to that Topic: […]