I analyzed 25+ years of #Nifty data to better understand bear markets ๐ป
Why?
Given the recent market sell-off and bearish stance of market participants, history and data is your best guide to prepare if we're headed for a bear market.
Thread with findings below ๐งต๐
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But first, do you know the definition of a bear market?
When any index falls 20% or more from it's all time high, it is termed to be in a #bearmarket ๐ป
How do you calculate length of a bear market? The time duration in days from previous all-time high to market bottom.
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๐ฎ๐ณ Nifty last 25 years (1997-2022*)
Number of Bear Markets = 8
Average drawdown % = -38.5%
Average bear market duration = 246 days (8 m)
Key takeaway - Bear markets occur every ~3 years and take on average 8 months to bottom
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1997 and 2006 saw the fastest bear markets with Nifty correcting 20-30% in just ~1 month.
Unbelievably, 1997 had 2 bear markets! Just imagine suffering 20% drawdowns twice in a few months!
Mar 2020 Covid crash was the 3rd fastest and 3rd worst bear market.
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Okay, how should we define Bear Market Recovery?
The no of days from market bottom to a new all-time high.
Sadly, bear markets take time to recover.
Almost double the time to recover to a new ATH compared to the time to form a bottom.
Avg recovery duration โ 495 days
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