Note: At the request of The Advisory Group in San Francisco, here’s updated comparison of four major cyclical bear markets. The numbers are through the January 21 close.

This chart series features an overlay of the Four Bad Bears in U.S. history since the market peak in 1929. They are:

  • The Crash of 1929, which eventually ushered in the Great Depression,
  • The Oil Embargo of 1973, which was followed by a vicious bout of stagflation,
  • The 2000 Tech Bubble bust and,
  • The Financial Crisis following the record high in October 2007.

    • The series includes four versions of the overlay: nominal, real (inflation-adjusted), total-return with dividends reinvested and real total-return.

    The first chart shows the price, excluding dividends for these four historic declines and their aftermath. As of Friday’s close are now 2025 market days from the 2007 peak in the S&P 500.

    Inflation-Adjusted Performance

    When we adjust for inflation, the gap between our current recovery and the other three widens, thanks to exceptionally low inflation in recent years.

    Nominal Total Returns

    Now let’s look at a total return comparison with dividends reinvested. The 1973 Oil Embargo Bear is the top performer, up 51.9%. The current recovery is in second place, up 42.5%.

    Real (Inflation-Adjusted) Total Returns

    When we adjust total returns for inflation, the picture significantly changes. The spread between three of the four markets narrows dramatically, and the current real total return has pulled far ahead of the others. Second place, by this metric, is virtually a dead heat for the other three.

    Here is a table showing the relative performance of these four cycles at the equivalent point in time.

    For a better sense of how these cycles figure into a larger historical context, here’s a long-term view of secular bull and bear markets, adjusted for inflation, in the S&P Composite since 1871.

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