Can your wealth survive a long term bear market? What are the odds this happens?
History shows that the equity market enters long periods of high returns, followed by lengthy periods of lower ones. These periods are called secular trends. There are two kinds of secular trends:
A secular bull market, or upward-trending market, occurs when each successive high point is higher than the previous one.
A secular bear market, or downward-trending market, occurs when a trend does not rise above the previous high.
We have had four bear markets that lasted 18 years, 25 years, 17years and 11 years.
Over the last hundred plus years, the stock market has rewarded some investors with long-term growth. But for most investors, a realistic time horizon is 10 to 20 years—not more than a century.
What happens if your peak saving years come during one of these long term bear flat markets?
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