When Will Stock Markets Recover?

Morningstar columnist John Rekenthaler looks at the lessons from two previous crashes, in 1987 and 2008, and finds that bear markets go through predictable stages

John Rekenthaler 23 March, 2020 | 11:35AM

Dow Trader

Typically, bear markets have four stages.

Stage one is recognition. Almost everybody shrugs off a bear market’s initial slide as being an ordinary event. The markets rise, and they fall. Treating every bad week as the bear’s arrival would not only shred one’s nerves, but would cause poor performance, should the investor act upon that instinct. Nine times of out 10, realising a quick 5% or 10% loss would result in a permanent 5% or 10% loss, as stocks quickly return to their previous level.  

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About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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