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Business Times
5 hours ago
- Business
- Business Times
Don't fall for the trap of the Taco trade
[SINGAPORE] At first, it was ominous. Then, it became obvious. There's a new trade in town called the Taco trade, or Trump Always Chickens Out. Here's how it works: When US President Donald Trump announced his Liberation Day tariffs on Apr 2, the S&P 500 index tanked by more than 10 per cent in days. His tariff threat lasted less than a week before he backed down, pausing the implementation of higher tariffs for 90 days. In response, the index jumped by 9.5 per cent in a single day. And just like that, the Taco trade was born. Despite the initial pause, underlying trade tensions re-emerged when the US raised tariffs on China and engaged in a tit-for-tat tariff battle, raising US import levies to as high as 145 per cent at its peak. Amid the war of words between the superpowers, the stock market was unsettled. Then on May 12, the US and China called a truce for 90 days with the US reducing tariffs to 30 per cent for Chinese imports, and China lowering its import levy to 10 per cent for American goods. Once again, the S&P 500 index rallied on the news; last Friday (Jun 6), it closed at just a stone's throw from its all-time high. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up By then, traders had started taking notice of the emerging pattern. Financial Times columnist Robert Armstrong coined the term Taco trade, an acronym that quickly spread all over Wall Street. Second guessing the Taco trade If you have noticed the Taco trade pattern, you're not alone – and that's a big problem. The truth is if everyone is thinking the same way, then no one has an edge over anyone else. Furthermore, if every trader anticipates a market recovery after Trump backs down, then the competition turns into one in which the fastest fingers to enter a trade wins. That's a race, not a strategy. Trying to second guess when the stock market will change course is no different from timing the market. Here's the rub: According to Hartford Funds, if you missed the 10 best days (read: gains) in the stock market over the past 30 years, your returns would be less than half the amount from staying fully invested over the same period. In other words, mistiming your entry and exit will have a severe impact on your investment returns if you miss even a tiny number of days. Like walking on a tightrope, a minor misstep could have major consequences. So, don't try your luck. History has not been kind to trendy trades History hasn't been favourable to formula-based investment strategies – for good reason. Take the Dogs of the Dow (DD), a methodology popularised in 1991. The DD formula suggested that investors can maximise their investment yield by buying the top 10 highest-paying dividend stocks from the Dow Jones Industrial Average (DJIA) at the start of every year. But alas, it was not to be. Research from the NYU Stern School of Business showed that when an investment strategy becomes popular, the masses try to front-run the strategy, pre-emptively piling into the shares and driving up their stock prices. With a higher starting price at the beginning of the year, the DD group will inevitably find it hard to outperform the market. Therein lies the paradox: Even a proven formulaic strategy will fail if the masses pile into the stocks. Ironically, the simplicity that helps popularise the strategy eventually leads to its demise. But if that's the case, where does this leave investors? It's the business, not the acronym If acronym-laden trades don't work, then why have the original FAANG stocks been profitable to shareholders over the past decade? While Taco and FAANG are acronyms, the similarity stops there. The Taco trade is subject to the whims of Trump, which can change at any moment. FAANG stocks, however, are made up of growing US tech businesses. Coined in 2013, the original acronym FANG consisted of Facebook (now Meta Platforms), Amazon, Netflix and Google (now Alphabet). Apple was added in 2017. Here's the difference for FAANG: Over the past decade, the average return from FAANG stocks was over 900 per cent or 10x in returns. Tellingly, these gains are largely backed by growth in the quintet's free cash flow (FCF) per share. The best example is Alphabet. Over the past decade, its shares grew by 640 per cent. In terms of FCF per share, the gain was 643 per cent, which closely matches its stock price increase. The main reason the FAANG group's share prices have risen over this period lies in the solid gains in their free cash flow. Unlike the Taco trade, FAANG's gains were not dependent on the whims of a US president. The long-term difference Here's the twist: Buying a group of stocks such as FAANG does not guarantee great returns. The key to turning a great stock into great returns is time. Simply put, the average 10x return the FAANG stocks delivered was only possible when there was enough time for the businesses to demonstrate their ability to grow. For investors, patience is paramount. Sadly, many investors invariably lose their nerve along the way and sell too soon. The truth is, holding a stock for a decade is not as easy as it looks. Wealth manager Ben Carlson provided two telling statistics. First, the good news: if you look at the rolling 10-year periods since 1950, the S&P 500 index has delivered positive returns 93 per cent of the time. That is, you have a high chance of getting good returns if you hold for a decade. That's the reward for patient investors. Then, there's the unfortunate news. The probability of a bear market (an index decline of 20 per cent or more) during these same 10-year periods is 95 per cent. When you put the two together, the message is clear: Volatility is the price of admission. It's the toll booth you have to pass to get the returns you want. Get smart: It's a marathon, not a sprint There's no doubt that the allure of making a quick buck is strong. That's why trends such as the Taco trade are popular. Clever branding plays a role. But the reason the FAANG strategy has worked has not been because the five company names lined up to form a catchy acronym. The real insight was about giving great businesses enough time to run. For investors, the real trick is about cultivating the iron gut of a long-distance runner, not just picking the right stocks. As the numbers from Ben Carlson clearly show, the real game-changer isn't about timing your entry or exit, but in not exiting too soon. Because when the market inevitably tests your resolve, that unwavering patience, not some trendy trade, will be the real differentiator between success and failure to get what you want. So, choose great businesses over stock prices, endurance over speed, and above all, patience over quick trades. In the long run, the road less travelled is the most rewarding, in my eyes. The writer is co-founder of The Smart Investor, a website that aims to help people to invest smartly by providing investor education, stock commentary and market coverage
Yahoo
3 days ago
- Business
- Yahoo
1 Brilliant Vanguard ETF to Invest $1,000 Into This June
Dividend growth stocks have historically produced the highest total returns with the lowest volatility. The Vanguard Dividend Appreciation ETF tracks an index that screens for the top dividend growth stocks. The fund has produced strong returns for investors, which could continue in the future. 10 stocks we like better than Vanguard Dividend Appreciation ETF › Vanguard has made it easy for anyone to be a passive investor. It has several passively managed exchange-traded funds (ETFs) designed to track a specific stock market index. That enables investors to buy funds with strategies that align with their objectives. Investing in dividend growth stocks is one of the smartest strategies because they've historically produced the highest total returns with the lowest volatility. That makes the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG), which tracks the performance of the S&P U.S. Dividend Growers Index, a brilliant ETF to buy. It could significantly grow the value of a $1,000 investment made this June. Most investors don't fully appreciate the power of dividend payments. Since 1940, dividend income has contributed 34% of the S&P 500's total return on average, according to data by Morningstar and Hartford Funds. Further, Hartford Funds and Ned Davis Research have found that since 1973, the average dividend payer in the S&P 500 has delivered a 9.2% average annual total return, more than double the return of non-dividend payers (4.3%). Dividend payers also had much lower volatility than non-dividend payers. In digging deeper into the data on dividends, Hartford Funds and Ned Davis Research uncovered that the best returns and lowest volatility came from dividend growers and initiators. They delivered an average total return of 10.2% compared to 6.8% for companies with no change in their dividend policy and a negative 0.9% average return for dividend cutters and eliminators. Given that data, investing in dividend growth stocks is a brilliant strategy. However, that's easier said than done for the average investor who doesn't have the time to actively manage a portfolio of dividend stocks. That's where Vanguard can help. The Vanguard Dividend Appreciation ETF tracks an index that screens companies for those with a consistent record of increasing their dividends for at least the past decade. It excludes the top 25% highest-yielding dividend stocks from the list because these companies tend to be at higher risk of being unable to grow their dividends (or worse, cut or eliminate their payouts), which has historically yielded lower investment returns. There are currently 338 stocks on the list. The Vanguard Dividend Appreciation ETF isn't a typical dividend ETF. Many of those funds focus on holding higher-yielding dividend stocks and cater more to income-focused investors. This fund aims to benefit from the value growth that dividend growth stocks have historically delivered. That's why its dividend yield (recently around 1.7%) is lower than many other top dividend ETFs. However, what this ETF lacks in yield, it more than makes up for in total return. Over the past 10 years, the fund has delivered an 11.5% average annual return. At that rate, it would have grown a $1,000 investment made a decade ago into nearly $3,000. That's a great return for a lower-risk investment strategy. While the fund's past performance doesn't guarantee it will produce similar returns in the future, its focus on dividend growers puts it in a strong position to meaningfully increase the value of an investment over the long term. For example, if it can deliver a 10% annual return, it could grow a $1,000 investment into nearly $17,500 in 30 years. Meanwhile, if it maintained its rate of return over the past decade (11.5%), it could grow $1,000 into over $26,000 in 30 years. The more you invest in the fund, the more money you can potentially make in the future. Adding $1,000 to your investment in this ETF each year could grow the total value to nearly a quarter of a million dollars in 30 years at an 11.5% annual rate of return. Dividend growth stocks have historically been powerful investments for those seeking to grow their wealth over time. They produce strong returns with less volatility than non-dividend payers and other dividend stocks. Because of that, the Vanguard Dividend Appreciation ETF looks like a brilliant ETF to invest $1,000 into this June. It could grow that money into a much larger future windfall. Before you buy stock in Vanguard Dividend Appreciation ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Dividend Appreciation ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF. The Motley Fool has a disclosure policy. 1 Brilliant Vanguard ETF to Invest $1,000 Into This June was originally published by The Motley Fool
Yahoo
3 days ago
- Business
- Yahoo
1 Brilliant Vanguard ETF to Invest $1,000 Into This June
Dividend growth stocks have historically produced the highest total returns with the lowest volatility. The Vanguard Dividend Appreciation ETF tracks an index that screens for the top dividend growth stocks. The fund has produced strong returns for investors, which could continue in the future. 10 stocks we like better than Vanguard Dividend Appreciation ETF › Vanguard has made it easy for anyone to be a passive investor. It has several passively managed exchange-traded funds (ETFs) designed to track a specific stock market index. That enables investors to buy funds with strategies that align with their objectives. Investing in dividend growth stocks is one of the smartest strategies because they've historically produced the highest total returns with the lowest volatility. That makes the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG), which tracks the performance of the S&P U.S. Dividend Growers Index, a brilliant ETF to buy. It could significantly grow the value of a $1,000 investment made this June. Most investors don't fully appreciate the power of dividend payments. Since 1940, dividend income has contributed 34% of the S&P 500's total return on average, according to data by Morningstar and Hartford Funds. Further, Hartford Funds and Ned Davis Research have found that since 1973, the average dividend payer in the S&P 500 has delivered a 9.2% average annual total return, more than double the return of non-dividend payers (4.3%). Dividend payers also had much lower volatility than non-dividend payers. In digging deeper into the data on dividends, Hartford Funds and Ned Davis Research uncovered that the best returns and lowest volatility came from dividend growers and initiators. They delivered an average total return of 10.2% compared to 6.8% for companies with no change in their dividend policy and a negative 0.9% average return for dividend cutters and eliminators. Given that data, investing in dividend growth stocks is a brilliant strategy. However, that's easier said than done for the average investor who doesn't have the time to actively manage a portfolio of dividend stocks. That's where Vanguard can help. The Vanguard Dividend Appreciation ETF tracks an index that screens companies for those with a consistent record of increasing their dividends for at least the past decade. It excludes the top 25% highest-yielding dividend stocks from the list because these companies tend to be at higher risk of being unable to grow their dividends (or worse, cut or eliminate their payouts), which has historically yielded lower investment returns. There are currently 338 stocks on the list. The Vanguard Dividend Appreciation ETF isn't a typical dividend ETF. Many of those funds focus on holding higher-yielding dividend stocks and cater more to income-focused investors. This fund aims to benefit from the value growth that dividend growth stocks have historically delivered. That's why its dividend yield (recently around 1.7%) is lower than many other top dividend ETFs. However, what this ETF lacks in yield, it more than makes up for in total return. Over the past 10 years, the fund has delivered an 11.5% average annual return. At that rate, it would have grown a $1,000 investment made a decade ago into nearly $3,000. That's a great return for a lower-risk investment strategy. While the fund's past performance doesn't guarantee it will produce similar returns in the future, its focus on dividend growers puts it in a strong position to meaningfully increase the value of an investment over the long term. For example, if it can deliver a 10% annual return, it could grow a $1,000 investment into nearly $17,500 in 30 years. Meanwhile, if it maintained its rate of return over the past decade (11.5%), it could grow $1,000 into over $26,000 in 30 years. The more you invest in the fund, the more money you can potentially make in the future. Adding $1,000 to your investment in this ETF each year could grow the total value to nearly a quarter of a million dollars in 30 years at an 11.5% annual rate of return. Dividend growth stocks have historically been powerful investments for those seeking to grow their wealth over time. They produce strong returns with less volatility than non-dividend payers and other dividend stocks. Because of that, the Vanguard Dividend Appreciation ETF looks like a brilliant ETF to invest $1,000 into this June. It could grow that money into a much larger future windfall. Before you buy stock in Vanguard Dividend Appreciation ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Dividend Appreciation ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF. The Motley Fool has a disclosure policy. 1 Brilliant Vanguard ETF to Invest $1,000 Into This June was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
03-06-2025
- Business
- Globe and Mail
3 Safe Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 11.35% -- That Make for No-Brainer Buys in June
There are a lot of strategies investors can employ on Wall Street to grow their wealth. With thousands of publicly traded companies and more than 3,000 exchange-traded funds (ETFs) to choose from, there's bound to be one or more securities that can help you meet your investment goals. But among these countless strategies, buying and holding high-quality dividend stocks delivers some of the most robust returns over long periods. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Companies that pay a regular dividend to their shareholders are often profitable on a recurring basis, capable of providing transparent long-term growth outlooks, and have, in many instances, demonstrated their ability to navigate an economic downturn. This time-tested aspect of dividend stocks helps to lure income seekers. However, the most intriguing characteristic of dividend stocks is their long-term outperformance. In The Power of Dividends: Past, Present, and Future, the researchers at Hartford Funds, in collaboration with Ned Davis Research, compared the annualized return of dividend stocks to non-payers over a 51-year period (1973-2024). Not only did the dividend stocks more than double up the annualized return of non-payers (9.2% vs. 4.31%), but they did so while being considerably less volatile. The challenge for income seekers is balancing yield and risk. The higher the yield, the higher probability of things being too good to be true. Since yield is a function of payout relative to share price, a struggling business with a plunging share price can trap investors with a high but unsustainable yield. The good news is that safe ultra-high-yield dividend stocks, with yields that are at least four times higher than the average yield of the benchmark S&P 500 (1.31%, as of May 30), do exist, and can make investors richer over time. What follows are three ultra-high-yield dividend stocks, sporting an average yield of 11.35%, which make for no-brainer buys in June. Annaly Capital Management: 14.78% yield The first supercharged income stock that makes for a compelling buy in June comes from an industry that Wall Street analysts have almost universally disliked since this decade began: mortgage real estate investment trusts (REITs). I'm talking about Wall Street's leading mortgage REIT, Annaly Capital Management (NYSE: NLY). Recently, Annaly's board increased its quarterly distribution to $0.70 per share, which marks the first time since 2011 that the company has increased its dividend. While a nearly 15% yield might sound unsustainable, Annaly has averaged a roughly 10% annual yield over the last two decades. The reason Wall Street has generally avoided mortgage REITs is because they're highly sensitive to changes in interest rates. Companies like Annaly typically don't perform well when the Federal Reserve is rapidly increasing interest rates, as well as when the Treasury yield curve is inverted. This results in higher short-term borrowing costs for Annaly and its peers and reduces net interest margin. But when things seem their bleakest for mortgage REITs is when it's often the best time to buy. The steep yield-curve inversion that had worked against Annaly and its peers is no longer inverted (albeit by a small amount). Additionally, the nation's central bank is in the midst of a well-telegraphed rate-easing cycle. A falling rate environment has historically been when mortgage REITs thrive. Short-term borrowing costs begin to fall, but still allow companies like Annaly to increase the average yield on the mortgage-backed securities they're buying and holding. Best of all, $75 billion of Annaly Capital Management's $84.9 billion asset portfolio is in highly liquid agency securities. An "agency" asset is backed by the federal government in the unlikely event of default. This added protection affords Annaly the ability to lever its investments to maximize its profits and dividend. With Annaly trading ever-so-slightly below its book value -- mortgage REITs often trade close to their respective book value -- and industry variables now working in its favor, the time to buy this income colossus has arrived. Pfizer: 7.32% yield A second ultra-high-yield dividend stock that makes for a no-brainer buy in June is none other than pharmaceutical giant Pfizer (NYSE: PFE), which is yielding north of 7.3% for its shareholders. The weakness in Pfizer's stock over the last three years can best be described as the company being a victim of its own success. During the COVID-19 pandemic, Pfizer's vaccine (Comirnaty) and oral therapy (Paxlovid) generated more than $56 billion in combined sales in 2022. Last year, sales shrank to about $11 billion on a combined basis and will likely fall further in 2025 on weaker Paxlovid sales. Though Pfizer has lost tens of billions in COVID-19 therapy sales, perspective also shows that Comirnaty and Paxlovid are generating north of $1 billion in combined quarterly sales when no sales existed at the end of 2020 from this area of focus. Pfizer's revenue, including acquisitions, has grown by more than 50% over the last four years. In short, it's a stronger and more diverse company today than it was at the end of 2020 -- but it's not being treated like one due to recent sales weakness in its COVID-19 therapies. One of the many reasons Pfizer can thrive moving forward is the December 2023 acquisition of cancer-drug developer Seagen for $43 billion. Aside from recognizing billions of dollars in immediate revenue, Seagen vastly expands Pfizer's oncology pipeline, which can benefit from strong pricing power and patients gaining earlier access to cancer-screening tools. Furthermore, cost synergies directly tied to this buyout, coupled with Pfizer's ongoing cost realignment program, should result in approximately $4.5 billion in net-cost savings by the end of this year. Reduced costs should be a positive for the company's margins. Investors should also consider that healthcare is an incredibly defensive sector. Regardless of how well or poorly the U.S. economy and stock market perform, people will continue to need prescription medicines. Though Pfizer isn't going to knock anyone's socks off with its growth rate, its cash flow tends to be highly predictable. Pfizer stock is trading at less than 8 times forecast earnings per share for 2025, which makes this an ideal time for opportunistic income seekers to pounce. PennantPark Floating Rate Capital: 11.94% yield The third high-octane dividend stock income investors can purchase with confidence in June is small-cap business development company (BDC) PennantPark Floating Rate Capital (NYSE: PFLT). Unlike Annaly Capital Management and Pfizer, PennantPark pays its dividend on a monthly basis and is currently yielding close to 12%. A BDC is a type of business that invests in middle-market companies -- i.e., unproven small- and micro-cap companies. At the end of March, PennantPark held almost $240 million in various preferred and common stock in middle market companies, along with $2.1 billion in first lien secured debt. This makes it a predominantly debt-focused BDC. Focusing on debt offers a huge advantage when dealing with middle-market companies. Since these businesses often lack access to basic financial services, PennantPark can typically net a higher yield on its loans. As of March 31, its weighted average yield on debt investments was a scorching-hot 10.5%, which is more than double the yield you'll find on U.S. Treasury bonds. But the company's biggest advantage might just be that approximately 100% of its debt investments sport variable rates. When the Fed aggressively fought back against rapidly rising inflation in 2022 and 2023, it sent PennantPark's weighted average yield on debt investments notably higher. Even with the nation's central bank in a rate-easing cycle, rate cuts are being addressed slowly. This is allowing PennantPark to continue to facilitate high-interest loans. Something else to note about PennantPark Floating Rate Capital is that delinquencies are minimal. Despite dealing with unproven businesses, only four companies, representing 2.2% of its portfolio on a cost basis, are currently delinquent. This is a testament to the vetting process by PennantPark's team. Further, management has done an excellent job of protecting the company's invested principal. Including its preferred and common stock holdings, PennantPark has an average investment of $14.7 million spread across 159 companies. No single investment is large enough to compromise profitability or rock the boat. To build on this point, all but $4.4 million of its $2.1 billion in debt investments is first-lien secured debt. First-lien secured debtholders find themselves at the front of the line for repayment in the event that a borrower seeks bankruptcy protection. Similar to Annaly, PennantPark Floating Rate Capital tends to trade very close to its book value. With shares currently trading at a 7% discount to book, opportunistic investors can nab a fantastic company at a bargain price. Should you invest $1,000 in Annaly Capital Management right now? Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Yahoo
02-06-2025
- Business
- Yahoo
How Long Do Bear Markets Last? Here's What History Tells Investors.
Bear markets happen about every 3.5 years, on average. They typically last less than a year -- far less than bull markets. Of course, some can last a very long or short time, so be prepared. These 10 stocks could mint the next wave of millionaires › When you read about various people getting rich by investing in the stock market, it's perhaps natural to imagine that they had an easy time of it. Invest in stocks, wait a while, and get rich. It kind of does happen like that, but it's important to understand that the stock market doesn't go up in a straight line. It's a zig-zaggy line, with small and large swoons and surges throughout. Such stock market volatility -- and an occasional bear market -- is inevitable if you're going to invest in the stock market for a long time. (And a long time is what most people need to amass significant wealth through stocks.) Here's a look at how long bear markets have lasted in the past, along with other relevant information. First, let's define our terms. If the stock market falls by between approximately 10% and 20%, that's generally referred to as a correction. If it falls by 20% or more, that's considered a stock market crash. This is where bear markets enter the picture. If the stock market has been heading south for around two months or longer and has fallen by at least 20%, you've got a bear market. (Prolonged periods of generally rising stocks are called bull markets.) Bear markets can be triggered in a variety of ways. They're often tied to a drop in consumer confidence, which has fallen in recent years due to factors such as the bursting of a bull market's bubble, a recession, the global COVID-19 pandemic, and the subprime mortgage crisis. Global economic instability can also trigger a bear market, and recent tariff wars have certainly boosted uncertainty. Interestingly, a Reuters report in late May noted that "U.S. consumer confidence improved in May after deteriorating for five straight months amid a truce in the trade war between Washington and China, though households continued to worry about tariffs raising prices and hurting the economy." Despite all this, we are not currently in a bear market. As stock investors, it's good to understand how long bear markets last. There's no standard length, of course, and stock market history features some very long and very short bear markets. Here are some things to know: The average length of a bear market since 1928 has been 11.4 months, per Yardeni Research. The stock market has lost about 35%, on average, in bear markets, according to Hartford Funds, while bull markets have averaged gains of 111%. A bear market ends when there's a prolonged upswing, and Yardeni's data show that a full recovery, with the stock market returning to its previous peak, takes an average of 2.5 years. Those are just averages, though. The shortest bear market happened in 2020, due to the pandemic, when the S&P 500 cratered by more than 30% in only 33 trading days -- and it fully recovered within four months. One of the longest bear markets for the S&P 500 is measured from a peak in March of 2000, when the "internet bubble" burst. The S&P 500 dropped by 49% and took 31 months to recover, or about 2.6 years. (Go back to the early 1900s and the 1800s, and you'll find some even longer ones.) Since the 1800s, the market has taken an average of about 4.5 years to recover from a bear market. That's the average, though, which incorporates a few very big numbers. The median time for a recovery is 2.4 years. (The median is the middle value if you were to rank all the durations by length.) Bear markets happen, on average, roughly every 3.5 years. First off, since market downturns can occur at any time, be sure that the only money you park in stocks is money you won't need for at least five years, if not 10. You don't want to have to sell when the market is down. Otherwise, think twice before selling after a crash. Remember that money is made by buying low and selling high, so it's often unwise to sell after a market drop. Hartford Funds notes: About 42% of the S&P 500 Index's strongest days in the last 20 years occurred during a bear market. Another 36% of the market's best days took place in the first two months of a bull market -- before it was clear a bull market had begun. In other words, the best way to weather a downturn could be to stay invested since it's difficult to time the market's recovery. Remember, too, that big market downturns tend to produce big opportunities in the form of great stocks with temporarily depressed prices. Bear markets can be terrific times to keep adding to your long-term stock portfolio. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $350,426!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,129!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $651,049!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of May 19, 2025 The Motley Fool has a disclosure policy. How Long Do Bear Markets Last? Here's What History Tells Investors. was originally published by The Motley Fool
