Bear markets vary in duration, recovery time

The Ticker

August 19, 1998|By JULIUS WESTHEIMER

A BEAR MARKET -- typically a drop of at least 15 percent -- can be agonizingly long or mercifully short.

Research discloses that the 1961-1962 Kennedy bear market showed a decline of 29 percent, as measured by the S&P 500 stock index, but lasted only six months.

A severe Wall Street plunge in 1973-1974 pushed the S&P 500 down 48 percent (the equivalent of about 500 S&P points today and a setback of about 4,000 Dow Jones points) and lasted 21 months.

It took 64 months for the market to regain its previous high.

More recently, the 1987 bear market, which drove stocks down 34 percent, lasted only two months but required 23 months to regain its former high.

On average, since 1953, bear market downturns showed declines of 24 percent, lasted eight months and required 13 months to reach previous highs.

GETTING CLOSER: Joseph A. Sweeney of Baltimore, writes: "I have been told that the year 2000 and its computer breakdowns will cause a complete collapse of financial services. News reports say people are selling their stocks and taking money from banks. What should people do?"

Don't panic. Most systems will not fall apart.

However, make and keep copies of bank and brokerage statements in the last several months of 1999. Match them with early year 2000 statements.

Make sure that firms you are dealing with are in compliance with year 2000 regulations and have taken proper steps to upgrade their systems. Get letters to document their compliance.

WALL STREET WATCH: "I welcome the 10 percent correction because it means you don't have a more substantial setback later on. We should see a 20-30 percent total decline, so we have further to go." (John Neff, retired manager, Vanguard Windsor Fund)

"I feel the Dow will fall to the 7,400-7,900 level." (Ralph Acampora, Prudential Securities' director of technical research)

Pub Date: 8/19/98

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