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This chart series features an overlay of the Four Bad Bears in U.S. history since the market peak in 1929. They are:

  1. The Crash of 1929, which eventually ushered in the Great Depression,
  2. The Oil Embargo of 1973, which was followed by a vicious bout of stagflation,
  3. The 2000 Tech Bubble bust and,
  4. The Financial Crisis following the nominal all-time high in 2007.

The series includes four versions of the overlay: nominal, real (inflation-adjusted), total-return with dividends reinvested, and real total-return.

The first chart shows the price, excluding dividends for these four historic declines and their aftermath. We are now 1330 market days from the 2007 peak in the S&P 500. In nominal terms (not adjusted for inflation) over the same elapsed time, the Financial Crisis (current market) is our top performer, 4.6% below its peak, with the 1973 Oil Embargo in second at -10.5%. The post-Tech Bubble is in third place at -20.0%. The crash of 1929 fared far worse at -71.1%.

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Inflation-Adjusted Performance

When we adjust for inflation, our current secular bear is in the lead, but the real decline from the peak worsens to -13.2%. The other 21st century secular bear comes in second at -29.9%.

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Nominal Total Returns

Now let's look at a total return comparison with dividends reinvested. Interestingly enough, the post-Oil Embargo market is the top performer, up 12.5%. Our current post-Financial Crisis market is second, up 5.5%.

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Real (Inflation-Adjusted) Total Returns

But when we adjust total returns for inflation, the picture changes dramatically. The spread between the four markets narrows, with the current market in the lead, down 4.0%, and the Great Depression still in last place, but with a statistically less grim -49.0% (those deflated dollars of the 1930s bought more).

(click to enlarge)

Here is a table showing the relative performance of these four cycles at the equivalent point in time.

For a better sense of how these cycles figure into a larger historical context, here's a long-term view of secular bull and bear markets, adjusted for inflation, in the S&P Composite since 1871.

For a bit of international flavor, here's a chart series that includes the so-called L-shaped "recovery" of the Nikkei 225. I update these every few weeks.

These charts are not intended as a forecast but rather as a way to study the current market in relation to historic market cycles.


Footnote: In previous commentaries on these bad bears, I used the Dow for the first event and the S&P 500 for the other three. However, I'm now including a pair of total return version of the chart, which requires dividend data. Thus I'm now using the S&P 90, for which I have dividend data. The S&P 90 was a daily index launched by Standard & Poor's in 1926 and preceded the S&P 500, which dates from March 1957.

Inflation adjustment is based on the Consumer Price Index.

Source: The 4 Totally Bad Bears: New Update