Stock Market Performance over 102 Years

  Stock Market Performance over 102 Years
How has the stock market performed over the last 102 years? To gain
a perspective on the magnitude of bull and bear markets, consider
Tables 1-4 and 1-5. This data was provided by the Hays Advisory
Group, and it presents all the bull and bear markets in the twentieth
century, using the DJIA as the benchmark. Neither the Standard &
Poor’s 500 nor the Nasdaq Composite Index has historical data that
far back in time. Therefore, the DJIA was used to gather data.
Market academicians define a bear market or bull market as a
decline or rise of 20 percent, respectively, in a major market index
(such as the DJIA, the S&P 500, and the Nasdaq Composite Index).
Table 1-4 adheres to this classification, but Table 1-5 has six time
frames in which the change in percentage was less than 20 percent.
Since Hays provided the data, I did not adjust it.
As Table 1-4 indicates, there have been 27 bull markets from
1900 through 2000, with an average gain of 91.5 percent and an
average duration of 28.8 months (2.4 years). The average gain is
skewed by the superbullish May 1926–March 1937 time frame, in
which the cumulative return was over 459 percent, and the
November 1990 through July 1998 time frame, where the return
was 300 percent. These few outsized positive returns pumped up
the average return during a bull market run to 91.5 percent. Be
aware of this fact when comparing bull markets to each other.
Looking at the bear market scenario in Table 1-5 we find that
there have been 28 bear markets, with an average drop of –30 percent.
The largest drop ever was the –90 percent tumble from
September 1929 to July 1932. The next worst was the January 1973
through December 1974 period (and February 1906 through
TA B L E 1-4
Over a Century of Bull Markets
Dow Jones Industrials
START END LENGTH* START END %CHANGE
SEPT 1900 JUNE 1901 10 54 78 44%
NOV 1903 FEB 1906 27 44 100 127%
NOV 1907 DEC 1909 26 54 100 85%
SEPT 1911 OCT 1912 14 73 94 22%
DEC 1914 NOV 1916 24 54 110 104%
DEC 1917 NOV 1919 24 68 115 69%
AUG 1921 MAR 1923 20 65 105 62%
JUN 1924 FEB 1926 21 90 170 89%
MAY 1926 SEP 1929 41 150 390 160%
JUL 1932 FEB 1934 20 40 110 175%
SEPT 1934 MAR 1937 31 85 190 124%
MAR 1938 SEPT 1939 19 100 160 60%
APR 1942 JUNE 1946 50 95 210 121%
JUN 1949 JAN 1953 43 180 295 64%
SEPT 1953 APR 1956 32 270 510 89%
OCT 1957 JAN 1960 27 410 690 68%
OCT 1960 NOV 1961 14 580 720 24%
JUN 1962 FEB 1966 45 540 1000 85%
OCT 1966 DEC 1968 27 750 975 30%
MAY 1970 JAN 1973 32 550 1050 91%
DEC 1974 SEP 1976 22 570 1025 80%
MAR 1980 APR 1981 13 750 1020 36%
AUG 1982 JAN 1984 18 790 1300 65%
JULY 1984 AUG 1987 37 1100 2750 150%
OCT 1987 AUG 1990 33 1620 3025 87%
NOV 1990 JUL 1998 92 2350 9367 300%
SEP 1998 JAN 2000 16 7400 11750 59%
OCT 2002 ? ? ? 7286 ? ?
27 Bull Markets
Average Length 28.8
Average Gain 91.5% * in months
Source: Morning Market Comments, by Don Hays, August 21, 2002. Reprinted with permission of Hays Advisory Group.


TA B L E 1-5
Over a Century of Bear Markets
Dow Jones Industrials
START END LENGTH* START END %CHANGE
DEC 1899 SEP 1900 10 75 54 28%
JUN 1901 NOV 1903 30 78 44 44%
FEB 1906 NOV 1907 22 100 54 46%
DEC 1909 SEP 1911 22 100 73 27%
OCT 1912 JUL 1914 22 94 72 23%
NOV 1916 DEC 1917 14 110 68 38%
NOV 1919 AUG 1921 22 94 72 23%
MAR 1923 JUN 1924 16 105 90 14%
FEB 1926 MAY 1926 4 170 150 12%
SEP 1929 JUL 1932 35 390 40 90%
FEB 1934 SEP 1934 8 110 85 23%
MAR 1937 MAR 1938 13 190 100 47%
SEP 1939 APR 1942 31 160 95 41%
JUN 1946 JUN 1949 37 210 180 14%
JAN 1953 SEP 1953 9 295 270 8%
APR 1956 OCT 1957 19 510 410 20%
JAN 1960 OCT 1960 10 690 580 16%
NOV 1961 JUN 1962 7 720 540 25%
FEB 1966 OCT 1966 9 1000 750 25%
DEC 1968 MAY 1970 18 975 550 44%
JAN 1973 DEC 1974 24 1050 570 46%
SEP 1976 MAR 1980 42 1025 750 27%
APR 1981 AUG 1982 16 1020 790 23%
JAN 1984 JUL 1984 7 1300 1100 15%
AUG 1987 OCT 1987 2 2750 1620 41%
AUG 1990 NOV 1990 4 3025 2350 22%
JUL 1998 SEP 1998 2 9367 7400 21%
JAN 2000 OCT 2002 30 11723 7286 38%
28 Bear Markets
Average Length 17.3
Average Gain 30.0% * in months
Source: Morning Market Comments, by Don Hays, August 21, 2002. Reprinted with permission of Hays Advisory Group.

November 1907), with a drop of –46 percent. The most recent bear
market, probably ending on October 9, 2002, produced a drop of
–38 percent for the DJIA. But the S&P 500 Index fell –49 percent
during this time frame and the Nasdaq Composite got clobbered,
dropping –78 percent.
The average bear market has lasted 17.3 months. But there
have been some catastrophic ones, including the 35-month bear
market from September 1929 to July 1932, the 37-month bear market
from June 1946 to June 1949, the 42-month bear market from
September 1976 to March 1980, and of course the last 32-month
bear market from January 2000 through October 2002.
Bear markets drops are much faster than bull market rises. For
example, from January 1, 1991, to March 31, 2000, a period of 9.25
years, the S&P 500 rose from 330.22 to 1498.50 points, or a total gain
of 1168.28 points resulting in a gain of 353 percent. In stark contrast
from the end of June through the end of July 2002, the S&P 500 fell
266 points, or a loss of approximately 23 percent of that entire gain
over a period of just two months. That’s volatility in a bear market!
The third quarter of 2002 produced the worst quarterly results in 15
years, with the major averages down 18 percent or more.