Bear Markets and Recessions

It’s official: the Bear Market of 2018. Like many of the previous Bears, it’s been an elevator down, with a 20% decline in just 3 months.

list of bear markets image1

The question many are asking: is this decline just a decline or is it signaling an oncoming recession?

Looking back at history, the answer is far from clear. This is now the 21st Bear Market since 1929. Of the previous 20, only 11 were associated with a recession (55% of the time).

list of bear markets image2

The list of Bears with no recession is probably longer than you would have guessed…

list of bear markets image3
What gives? Isn’t the stock market a “leading indicator” of the economy?

Yes, it can be at times but it’s far from a perfect one.

Sometimes a Bear is just a Bear. Is this one of those times? We’ll only know in hindsight.

Looking at the data, the U.S. economy does not yet appear to be in a recession, but that fact is hardly an all-clear. After the March 2000 stock market peak, a recession did not begin until a year later: March 2001. No one can say for sure that in September 2019 (a year from the September 2018 S&P 500 peak) there won’t be a recession.

And so, we wait, evaluating the evidence as it develops. If a recession is coming, the odds favor a longer and deeper bear market (-42% over 17 months on average). But there’s much variation within those odds…

In the 1990-91 recession, stocks declined only 20% over a 3 month period and during the 1929-33 depression stocks declined 86% during a 33-month period.

So while unlikely, a recession could be coming without any further stock market declines. It’s safe to say that most investors are probably not thinking about a repeat of the 1990 scenario. They are most likely assuming the 50%+ recessionary bear markets of 2000-02 and 2007-09 are the norm. While a repeat of these calamities is certainly possible, so is a much shallower Bear Market and recession, or no recession at all.

In markets, every time is different. 2018 has proved this maxim once again.




Charlie Bilello is the Director of Research at Pension Partners, LLC, an investment advisor that manages mutual funds and separate accounts. He is the co-author of four award-winning research papers on market anomalies and investing. Charlie is responsible for strategy development, investment research and communicating the firm’s investment themes and portfolio positioning to clients. Prior to joining Pension Partners, he was the Managing Member of Momentum Global Advisors and previously held positions as a Credit, Equity and Hedge Fund Analyst at billion dollar alternative investment firms.

Charlie holds a J.D. and M.B.A. in Finance and Accounting from Fordham University and a B.A. in Economics from Binghamton University. He is a Chartered Market Technician (CMT) and also holds the Certified Public Accountant (CPA) certificate.

In 2017, Charlie was named the StockTwits Person of the Year. He has been named by Business Insider and MarketWatch as one of the top people to follow on Twitter and his work has been featured in Barron’s, Bloomberg, and the Wall Street Journal.

You can follow Charlie on twitter here.


Pension Partners, LLC is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. For more information about Pension Partners please visit: and search for our firm name.

The information herein was obtained from various sources. Pension Partners does not guarantee the accuracy or completeness of such information provided by third parties. The information given is as of the date indicated and believed to be reliable. Pension Partners assumes no obligation to update this information or to advise on further developments relating to it.

The S&P 500 is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. An index is an unmanaged portfolio of specific securities which is often used as a benchmark in judging relative performance of certain asset classes. An index does not charge management fees or brokerage expenses and no such fees or expenses were deducted from the performance shown.

Past performance is not indicative nor a guarantee of future results.


This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.


Comments are closed.