The longest bull market in US history that began in March 2009 is over.

Bull markets end when a bear market sets in, which is a 20% decline from an all-time high. The all-time high was set on February 19th, 2020 when the S&P 500 hit 3,393 and ended on March 12th, 2020 when the S&P 500 crossed 2,714. At the time of this writing, the market is down 27% from its all-time high.

Bear markets, while emotionally draining, are a normal occurrence. So normal, in fact, that they happen on average 1 out of 5 years. The last bear market in the US was over a decade ago - we were due. The US economy was slowing in a typical late-business cycle fashion, we just weren’t sure how long that late stage was going to be. In my opinion, the market has been on edge for quite some time looking for any reason for the bull market to be over.

And then COVID-19 lit a fire in the economic tinder box.

We are still technically not in a recession. A recession happens when there are 2 consecutive quarters of negative GDP growth - so far we have not even had 1 quarter of negative GDP growth. But with the recent developments of COVID-19, that will almost assuredly change.

Neither I, nor anyone else, can predict when, where, or how this bear market will bottom out. We can only observe the historical fact that sooner or later they all have. Myself and my clients, being long-term investors, are given a choice: to be guided by the totality of history, or by today’s headlines. I choose history because “this time” is not different.

Selling into a bear market and sitting on cash waiting for the dust to settle is the surest way to derail a financial plan - even though, at the time, it’s what feels like the best thing to do. That is an emotional decision, one that is normal to feel - but the stock market punishes emotional decision making.

The average bear market declines by 30% - and as of this writing, we are down almost 27%. Given the velocity of this drawdown, it’s probable we are not yet at the bottom; but, historically speaking, we are likely closer to the bottom than not.

I suggest you focus on what you can control: your goals and your long-term plan for achieving those goals. This bear market will be a blip on the radar when you have a 30 to 50-year investment horizon. In fact, for many, it will prove to be a great moment to invest.

Do not give in to the fear you are experiencing.

Do not give in to the thought that “this time is different.”

Know that this too shall pass.

If you or someone you know needs to talk things through, please send them my way. I’m happy to do it - even if you/they are not a client.

Wash your hands.

Don’t touch your face.

And don’t touch your 401(k).

Full Disclosure: Nothing on this website should ever be considered to be advice, research or an invitation to buy or sell any securities. Please see the Disclaimer page for a full disclaimer.

About The Author

Shaun Melby, CFP® provides fee-only financial planning and investment management services in Nashville, TN. Melby Wealth Management serves clients as a fiduciary and never earns a commission of any kind. Shaun has over 10 years of experience as a financial advisor in Nashville.