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The right end of the bear — 7IM Short Thoughts

2 min watch
Ben Kumar, Head of Equity Strategy25 Jan 2024

There are several theories about the origin of the terms “bull market” and “bear market”, and an online search will take you down the rabbit hole. And these very popular terms are even used outside the financial circles. If you’re ever at the type of dinner party where that type of conversation arises, chances are everyone will keep up.

But if someone was to say the S&P 500 index climbed above its previous all-time high last week, putting a technical end to the bear market, what does this actually mean? How bad was this bear market cycle?

In the latest Short Thoughts video, Head of Equity Strategy Ben explains his favourite version of the origin of these terms, and he puts bear markets into perspective. Spoiler alert: it’s not as bad as most people might think.


Most financial terms are too boring to ever make it out into the real world. But bulls and bears have escaped. People know roughly what a bull market is and what a bear market is. The explanation for why these exact animals are used is quite interesting. Or at least my preferred version is. Bull markets go up because bulls attack by swiping upwards with their horns.

Bear markets go down because bears swipe downwards with their claws. Whether or not that's true, I'll leave for the internet to decide. But I bring it up today because as of last Friday, the US equity market hit its all time high back to where it was at the start of 2022. In the meantime though, we've had a bear market and we can now exactly define how that bear market went. Over a period of about nine months the market fell by 25%. And when you put that in the context of history using one of my favorite charts, going back to the 1940s, you can see that despite how weird 2023 felt for investors, the bear market was almost smack bang in the middle. Even a little bit better than average. Again, more evidence that staying invested not worrying about the downturns is the best route to riches.

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