The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 26

Nine Major Stock Market Cycles

Have you ever wondered how often bull markets come around? How about bear markets? These two charts tell it all in a very simple fashion. They come from Martin J. Pring's book Technical Analysis Explained: An Illustrated Guide for the Investor, which is a great source of charts. What you see is that between 1929 and 1977 there were nine major bull market trends and nine major bear markets. That means that over the 48 years shown, a full boom/bust cycle has occurred about every 5.3 years (48 divided by 9 is 5.3).

This chart also describes the relative length of the major bull market and bear market trends. A quick glance shows that the 1929 decline lasted about two and a half years. The 1937–1942 downtrend was the longest at a monstrous five years. The 1946–1949 decline lasted three years, and the 1953 decline only one year. The 1956–1957 decline, while more of a plateau than a bust, lasted two years. The 1962 and 1966 declines each lasted just one year. The 1968–1970 decline was about one and a half years, and the 1973–1974 decline was two years.

When you tally them, you see that out of 48 years only about 19 years were periods of major downtrends, or about 40 percent of the time. Those nine bear market trends lasted a little more than two years each on average (19 divided by 9 equals 2.1).

Interestingly, if you disregarded the exceptionally long 1937–1942 decline, the result wouldn't be much different. There would then be 14 years representing ...