Effect of Covid-19 on the sharemarket
Shorter than your average Bear?
The below chart shows the average length and recovery time of U.S. bear markets since 1800, separated by cause into Structural, Cyclical and Event Driven.
The average bear market across the three categories has seen a 38% decline, has lasted for 27 months and taken 60 months to recover.
For comparison purposes below is the number of each since 1800 (in brackets) and an example in each category:
-Structural (7): Global Financial Crisis 2007-2009
-Cyclical (14): Volker recession 1980-1982
-Event Driven (5): 1987 stock market crash
It is clear from the data that “Event Driven” bear markets tend to be shallower, shorter, and recover faster than average bear markets.
On face value the current COVID-19 led bear market would classify as an Event Driven bear.
Source: Goldman Sachs, Statista