Morningstar - Q2 2020 - 21

Dispatches

Global Briefs
A Downturn is a decline in the stock market
from its month-end peak by 20% or more.

TRENDS

A Recovery runs from the month-end bottom to
when the market returns to its previous peak.

An Expansion runs from the end of a recovery until
the next month-end peak before a 20% decline.

Global Pandemic
Ends Market Expansion
Downturn
The United States entered its ninth bear market
since the Great Depression, which remains the
most severe to date. Rather than simply showing
bull and bear markets, this chart from Morningstar

An Expansion runs from the end of a recovery until
the next month-end peak before a 20% decline.

Markets Observer adds context by delineating
downturns, recoveries, and expansions.* The most
recent market expansion started in March 2012
and, based on previous expansionary episodes,

A Recovery runs from the month-end bottom
to when the market returns to its previous peak.

A Downturn is a decline in the stock market
from its month-end peak by 20% or more.

146 Mo
697.7% TR
18.6% Annl

44 Mo
193.3% TR
34.1% Annl

134 Mo
434.5% TR
16.2% Annl
67 Mo
85.9% TR
11.7% Annl

16 Mo
50.9% TR
36.2% Annl

35 Mo
6 Mo
-21.8%

Expansion
Recovery
was cut short. At the end of 2019, our analysts
saw potential for further growth, but the expansion
came to a halt amid uncertainty surrounding
the economic consequences of the coronavirus.

151 Mo

19 Mo
-29.3%

Return
$10

135 Mo
523.2% TR
17.7% Annl

93 Mo
169.6% TR
13.7% Annl

5

12 Mo
14.6% TR
14.6% Annl

21 Mo
24.0% TR
13.1% Annl

1

10 Mo
6 Mo
-22.3%

Recessions

9 Mo

21 Mo
21 Mo
-42.6%

37 Mo

18 Mo
3 Mo
-29.6%

25 Mo
-44.7%

49 Mo

3 Mo
-19.6%

16 Mo
-50.9%

34 Mo
-83.4%

1926

1936

1946

1956

1966

1976

1986

1996

2006

03/2020

0.1

This exhibit varies sli htly from Exhibit 1 titled Traversin rashes that appears in lack Turkeys Everywhere on a e 38 in the Spotlight section. The exhibit here shows the total return of the Ibbotson Associates SBBI U.S. Large
tock ndex. The exhibit in lack Turkeys Everywhere shows the in ation-ad usted return of a hypothetical lar e-cap stock index.
Sources:
Morningstar,
National
of Economic Research. Data as of 03/31/2020.
ource Mornin
star. Data
as ofBureau
11/30/2017

When Will Stocks
Recover?
AMERICAS

United States

an ordinary event. The markets rise and they fall.
Treatin every bad week as the bear s arrival
would not only shred one s nerves it would cause
poor performance should an investor act on
that instinct. Nine times out of 10, realizing a quick
5% or 10% loss would result in a permanent
5% or 10% loss, as stocks quickly return to their
previous level.

Typically, bear markets have four stages.
Stage one is recognition. Almost everybody

shru s o a bear market s initial slide as

This bear market achieved stage one during its
third week. Stocks were up slightly for the year
before suddenly dropping 11% in the last week of

ebruary. n response advisory rms issued
reassuring notes about how these things happen
and market volatility is natural. The stock market
surged the following Monday, failed to hold
its gains, and then collapsed the second week of
March. The bear was on.
Stage two is panic. This occurs when shareholders
realize that the standard advice failed. Buying
on the dip wasn t easy money as it is nine times in
10. Rather, it led to greater damage. Along with the
pain (and regret) of unexpected losses comes the

mornin star.com/lp/ma a ine

21
https://www.morningstar.com/lp/magazine
Morningstar - Q2 2020

Table of Contents for the Digital Edition of Morningstar - Q2 2020
