Profitable investment in the US stock market usually requires patience and calculated risks. Understanding the S&P 500 in its historical context and its most bullish and bearish runs can help you make those calculated decisions.
Stay with us as we discuss the top three greatest bull and bear markets in the history of the S&P 500.
Greatest Bull Markets in History
First, let’s have a look at the top 3 greatest bull markets in history.
Nifty 50 (1970-1973)
- Lasted for: 32 months
- S&P 500 Return: 73.5%
Starting in 1970, with the advent of high-growth companies like Walt Disney (DIS), IBM (IBM), and McDonald’s, the market saw the bulls charging. These companies were called Nifty 50, and they led the S&P 500 towards an annual growth rate of more than 23%.
However, during the Nixon presidency in 1973, factors like rent controls, lower wages, and decreased prices gave rise to inflation, ultimately ending the nifty fifty bull run.
Reaganomics Era (1982-1987)
- Lasted for: 60 months
- S&P 500 Return: 228.8%
During the Reagan administration, Paul Volcker, the then chairman of the Federal Reserve, took productive measures to control inflation. The fierce interest rate cuts and tax cuts resulted in significant annual gains.
The S&P 500 experienced a remarkable 26.7% rise—twice its previous long-term average. This bullish market led to lower unemployment rates and the invention of the term “Reaganomics.”
The Internet Age (1987-2000)
- Lasted for: 147 months
- S&P 500 Return: 582%
With the Cold War fizzling out and the rise of the Internet Age in the 90s, the US economy saw a record-breaking rise that remains one of the greatest bull runs.
This period is the longest bull run in the S&P 500’s history (12 years). The index reported a surprising 582% return during this time. However, the bull run ended with the dot-com bubble—a notable bear run that lasted for two years.
Greatest Bear Markets in History
Here are the top 3 bear markets in history.
Global Financial Crisis (2007-2009)
- Lasted for: 17 months
- Rate of S&P 500 Decline: 56%
The “Global Financial Crisis 2008” is arguably the most significant bear run in stock market history. It resulted from a subprime mortgage bubble fueled by excessive lending to people with low credit scores.
This market crisis led to a massive 56% S&P decline. The bear run also provoked fears of the global financial system becoming destabilized, and its shockwaves were experienced around the world.
Dot Com Bubble (2000-2002)
- Lasted for: 31 months
- Rate of S&P 500 Decline: 49%
During the bullish 90s, the stock market valuations of major tech companies rose to unsustainable levels. As the Federal Reserve increased interest rates, the valuation bubbles burst.
It led to a bearish stock market that remains notable to this day. The market declined by 49%, and the S&P took more than four years to recover.
Black Monday (1987)
- Lasted for: 4 months
- Rate of S&P 500 Decline: 34%
Black Monday is one of the unique examples of a stock market bear run, as it lasted only one day.
On this day, the US stock market dipped by about 34%, and it is often cited as the first global financial crisis of modern times. Although no single factor caused the decline, it was fueled by the consistently declining market over the last several days.