An analysis of 43 bear markets by Morgan Stanley

US stocks may be looking a bit better after one of the worst starts to the year on record, but a number of markets, especially the emerging kind, have already entered or come within points of a bear market. Investors seeking clues as to the future direction of global equities might turn to history as their guide; Morgan Stanley analysts certainly have. They’ve crunched the numbers on more than 40 bear markets thoughout history, defined as a more than 20% peak to trough decline.

AN ANALYSIS OF 43 BEAR MARKETS BY MORGAN STANLEY

HOW LONG WILL THE DOWNTURN LAST AND HOW FAR COULD IT GO? On average, large sell-offs last about 190 business days and investors might expect a 30% pullback in that time frame based on previous history, Morgan Stanley says. For S&P 500, the bear market cycle usually takes a bit longer. Sheets and Co. concluded that for the US index the median bear market lasts for about 272 days and declines were roughly 28%, or slightly less than the worldwide average.






Japan’s Topix index saw by far the longest median bear market duration at 568 business days, skewed perhaps by the country’s Lost Decade. Here’s a look at the average bear market across various regions:



As of today, the MSCI emerging market index is the worst performer with a 35% decline over the past 362 business days. That could mean EM is fi nally set for a turnaround, as the average duration for a decline is actually the shortest at 121 days and the drops are typically 31%, as seen in the previous table.