As bear markets go, we’re back to the 1930s experience

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

With today’s drop, major stock market indexes are back to showing Depression-era declines.

The Standard & Poor’s 500 index, which lost 1.2% to 778.94, is down 50.2% from its record high reached in October 2007.

That exceeds the 49.1% total decline during the 2000-02 bear market and the 48.2% drop during the 1973-74 sell-off. Those were the worst losses of the post-World War II era -- until this bear market.

The S&P 500 still is 3.5% above its lowest closing level reached last fall, which was 752.44 on Nov. 20. At that point it was off 51.9% from the 2007 high. But that slide below the 50%-loss threshold lasted just one day; the S&P bounced back 6.3% on Nov. 21.

There were three bear markets during the Depression years of the 1930s, according to Standard & Poor’s calculations. The worst was the 1929-32 plunge, which slashed 86.2% from the S&P 500. The second, from March 1937 to March 1938, saw the index tumble 54.5%. During the third, from late 1938 to 1942, the S&P slumped 45.8%.

Sorry to throw out so many numbers, but I wanted to make the point: In terms of the loss of equity wealth, we now have fallen through what had been the previous worst experiences of the modern era.

We aren’t in uncharted territory, but by the simple measure of stocks’ percentage decline from their peak, we’re in territory that hasn’t been charted since the 1930s.