How Long Bear Markets Last: Recovery Times Since 1968

Key takeaways

• Across the eight big S&P Composite drawdowns since the December 1968 peak, the median gap between a peak and the next new high was 31.5 months nominally and 63 months after inflation.
• The December 1968 peak was back in nominal terms by March 1972, after 39 months. In real terms it wasn't regained until January 1992 — 277 months, or 23 years and 1 month.
• Dividends do most of the repair work. That 1968 peak was recovered in 47 months on a real total-return basis against 277 months on price alone, at a dividend yield averaging 3.99%.
• The index's recovery time is not a person's. Someone adding 6% of their starting balance a year through the 2000 bear market was whole in 78 months against 153 for a lump sum.
• The worst case in the data isn't American. Japan's OECD monthly share-price index peaked in December 1989 and did not regain that level until July 2025 — 427 months, or 35 years and 7 months.

How long bear markets last: two savers, one crash, two answers

Say you and a friend both put money into US shares at the very end of 1968, right at the top, and then leave it alone. In March 1972 he rings you up: the market has made a new high, you're whole, it's over.

He's right. He's also describing something that never happened to either of you. The index got back to its December 1968 level in 39 months measured in dollars. Measured in what those dollars could buy, it took until January 1992 — 277 months, twenty-three years, most of a working life. The gap between those two answers is 238 months.

So which of them should you carry around in your head? Across the eight big US drawdowns from that December 1968 peak onward, the median wait was 31.5 months if you count in dollars and 63 months if you count in purchasing power. Both medians describe exactly the same eight episodes. The only thing that changes is the yardstick.

That's the argument of this piece, and it's why a recovery table that ignores inflation is a comfortable table rather than an accurate one. What follows is what each of those eight episodes looks like measured three ways, what dividends did to the picture, and why your own recovery clock almost certainly runs on a different schedule from the index's.

Every major drawdown since the December 1968 peak, measured three ways

Here are all eight. Each row is one bear market, and the three recovery columns are that same episode on three different yardsticks. The spread between them is the story.

Read the last three columns across and the pattern is consistent. The nominal price column is the flattering one, the real price column is the punishing one, and real total return sits between them. Medians across the eight episodes: 31.5 months nominal price, 63 months real price, 37 months real total return.

The chart plots the sixth column — months to recover in real price terms — for each of the eight peaks. Two bars dominate it, and they're the two a nominal table hides from you completely.

In real terms, the market of August 1987 was still below the market of December 1968

The 1970s are the standing example of nominal recovery flattering, and the data is more extreme than the reputation. From the December 1968 peak, nominal prices took 39 months to recover. The real index kept falling, on and off, for another decade, bottoming in July 1982 at 62.6% below its 1968 level. Consumer prices had by then risen 2.75 times over. The index had gone essentially nowhere in dollars — 106.50 in December 1968, 109.40 in July 1982 — while the dollar had lost nearly two-thirds of its purchasing power.

One comparison makes it concrete. Imagine you'd held all the way through to August 1987, the top of the bull market that ended with Black Monday. The S&P Composite stood at 329.40 against 106.50 in December 1968. Your money had tripled. Would you have called that a recovery? In what it could actually buy, you were still 4.0% below where you'd been nineteen years earlier. The 1968 peak was only cleared in real terms in January 1992, by which point the price index had quadrupled.

That single episode is why both columns get computed. Anyone told in 1972 that the bear market was over was hearing something true and something useless at the same time.

Dividends did most of the repairing, and the yield that made that possible is gone

So would you really have waited 277 months? Almost certainly not, because that figure measures an index that throws dividends away. Reinvest them and the same December 1968 peak was recovered in real terms in November 1972, after 47 months.

The gap between 47 and 277 isn't a rounding difference. It's the entire character of the episode. The mechanism is dull and powerful: over the span from December 1968 to January 1992 the dividend yield on Shiller's series averaged 3.99% and reached 6.24% at its highest. Picture what that does inside a real account. Every quarter you're handed cash, and every quarter you buy more shares with it at prices that stay depressed for years. A price index can't see any of that. Your statement can.

The same effect shows up in the 2000 episode, but weaker: 171 months on real price against 153 months on real total return. The yield over that stretch averaged 1.89%, less than half the earlier period's. In June 2026 the yield on the same series was 1.09%. A drawdown starting from that level of income would have dividends doing considerably less of the work for you than they did in the 1970s, which is a reason to read the 47-month figure as the friendly end of the range rather than the typical case. A low starting yield is also what pushes a retiree from natural yield into selling units, whatever the original plan said.

The index's bear market recovery time is nobody's actual recovery time

Here's the strongest objection to everything above, and it's a good one. Time to break even is the wrong metric for most people. Almost nobody puts a lump sum in at the exact peak and then does nothing for a decade. You add money, or you take it out, and both change the answer enormously.

So picture three people who all bought at the August 2000 peak, on the same day, with the same balance. The first never adds another penny. On the real total-return series she's whole again in 153 months.

The second keeps paying in a constant real amount equal to 6% of that starting balance every year, and counts herself recovered when the portfolio is worth more than her starting balance plus everything she has added since. She gets there in 78 months. Roughly half the wait. At 12% a year of the starting balance it's 74 months. The mechanism isn't clever: a bear market is a long sequence of purchases at low prices, and enough of them drag your average cost down faster than the index climbs back. The same climb is the hurdle for anyone who sold on the way down, which is why moving to cash in a crash is judged on the recovery it has to beat rather than on the fall it avoided.

The third is drawing an income, and it cuts the other way just as hard. Taking a constant real 4% a year of that starting balance from the same August 2000 peak pushed break-even out to 206 months, in October 2017 — four and a half years later than the woman who did nothing at all. Selling units into a falling market permanently removes the shares that would have participated in the recovery. This is why retirement research obsesses over the order in which returns arrive rather than their average, and it's a close cousin of the arithmetic behind the gap between fund returns and investor returns.

So the table isn't a forecast of your recovery. It describes a specific, artificial investor: one who bought everything at the worst possible moment and then neither added nor withdrew a cent. That experience brackets the range. It isn't the middle of it.

The recession ends years before the bear market recovery time does

If you're waiting for the news to tell you the coast is clear, this is the reliable disappointment. The NBER dates the 2007-09 contraction from a peak in December 2007 to a trough in June 2009. The S&P Composite didn't regain its October 2007 nominal level until March 2013 — 45 months after the recession had officially ended, and 65 months after the market peak. The 2001 recession ran from March to November 2001; the August 2000 market peak wasn't recovered nominally until May 2007, and in real terms not until November 2014.

So when is a drawdown actually over? Not when the economists say the contraction ended. The pattern holds in the other direction too. The February-to-April 2020 recession was the shortest on the NBER's record, and the drawdown around it was correspondingly the shortest here at seven months. Short slump, short recovery. But a recession ending is not, on this evidence, evidence that a drawdown has ended.

If you want to check any of this yourself

Here's exactly what it's built from. Every figure above comes from one file: Robert Shiller's monthly US stock market dataset, which carries the S&P Composite price, dividends and the US consumer price index from 1871 to the present. Three choices inside that file shape everything, and each matters more than it sounds.

Monthly, not daily. Shiller's price for a month is an average of that month's daily closing prices — except the final month in the file, which the file notes is a single day's close. Averaging clips the tops off peaks and fills in the bottoms of troughs, so drawdowns measured this way look shallower than the headline numbers you remember. The 2022 fall is a clean test. On Shiller's monthly averages it was 20.3%. The daily S&P 500 series at the St. Louis Fed fell 25.4%, from a close of 4,796.56 on 3 January 2022 to 3,577.03 on 12 October 2022. Depth changed by five percentage points. The recovery date barely moved: daily data has the index back above its old close on 19 January 2024, monthly data in December 2023.

Price only, unless stated. The main table tracks the price index, which is what people mean when they say the market went up, and what almost every chart you'll ever see shows. It excludes dividends, and excluding dividends makes recoveries look far longer than an investor's actually were. The last column corrects for that using Shiller's real total-return series, which reinvests dividends back into the index.

Real means CPI-adjusted. The real series is the nominal price multiplied by the ratio of the latest CPI to that month's CPI. Recomputing it by hand from the price and CPI columns reproduces Shiller's real column exactly, to four decimal places. Because every comparison here is a ratio between two months, the choice of base month cancels out — the recovery dates would be identical whichever month you deflated to.

A drawdown here means a fall from an all-time high in the monthly-average nominal price. Recovery means the first month the index — on whichever of the three yardsticks is being measured — got back to the level it held in that same nominal peak month. That anchoring choice does real work: measuring the real column against the prior real all-time high instead would push the median from 63 months to 109.5. Eight episodes from the December 1968 peak onward are in the neighbourhood of 20% or worse, and those eight are all of them. Two, 1980 and 2020, fall a little short of that line on monthly averages while being unambiguous bear markets on daily prices, so they're included and flagged rather than quietly dropped. The start date is a choice too: a 22.5% fall from a December 1961 peak sits just outside the window, and it was back to a new high in 21 months nominally and 24 in real terms, so including it would pull both medians down.

Eight episodes, one country, and that country is the survivor

The limits are severe and they all point the same way.

Eight is a very small sample. Two episodes, 1968 and 2000, supply almost all of the tail. Remove them and the real median collapses. A median drawn from eight observations describes eight things that happened; it isn't a distribution.

The US is the wrong country to generalise from. Suppose you had been saving in Japan instead. The OECD's monthly share-price index there peaked in December 1989, fell 74.5% to a trough in November 2011, and didn't regain the 1989 level until July 2025 — 427 months, or 35 years and 7 months, in nominal local-currency price terms. It came within 0.5% in July 2024 and then slipped away again for a year. That's a nominal, price-only figure, and a Japanese holder reinvesting dividends did better. The point survives: the US recovery record isn't a law of nature.

Survivorship is baked in. The UBS Global Investment Returns Yearbook 2026, compiled by Dimson, Marsh and Staunton across 35 markets since 1900, puts US real equity returns at 6.6% a year from 1900 to 2025 against 1.6% for bonds. It also notes that the US now accounts for around 62% of world equity market value — a share built on precisely the returns being measured here.

Is the US record a fair guide to what shares do, then? The table above isn't a sample of what equities do. It's a sample of the one market that won. Anarkulova, Cederburg and O'Doherty, working with 39 developed countries from 1841 to 2019 in the Journal of Financial Economics, argue that a broad sample mitigates the survivor bias in US-only work, and estimate a 12% chance that a diversified investor with a 30-year horizon loses money relative to inflation. That's a direct challenge to the idea that any recovery table implies a guarantee.

The most recent CPI is partly estimated. Shiller flags three months of CPI in the file as estimates — the last two, and October 2025; the BLS series puts June 2026 at 333.952 against Shiller's 336.175, a difference of 0.7%. Because every real figure above is a ratio between two months, that gap doesn't move a single recovery date.

What would change the conclusion

A different inflation regime. Every long real recovery in this table is an inflation story, not a stock story. The 1968 peak needed 277 months in real terms because consumer prices nearly quadrupled over the span. In the 2007 episode, where inflation was mild, real recovery took 73 months against 65 nominal — a gap of eight months rather than 238. If inflation stays near target, the nominal and real columns converge and this whole distinction shrinks to a footnote.

A different yield. Dividends closed most of the 1968 gap because the yield averaged 3.99%. At the 1.09% of June 2026, and with more of the payout arriving as buybacks, real total-return recovery would sit far closer to the real price column than it did in the 1970s.

A wider sample. Eight US episodes is what a single monthly series back to 1871 supports. A dataset spanning many countries, of the kind Anarkulova and co-authors assemble, produces a fatter and less reassuring tail, and there's no strong argument for why the US distribution should be the right prior.

As of the latest data in that file — a July 2026 figure that the file's own footnote records as the 7 July close — the S&P Composite was at a nominal and real high, so none of these clocks was running on that date. Which leaves you with one question worth answering about your own money: not where the index is, but how far you are from your own peak, and which of the three columns above you're measuring that distance in. LedgerTouch reports that drawdown continuously; a spreadsheet with a CPI column does the same job once a month. Either beats the nominal chart, which is the one that told your friend he had recovered in 1972.

Extending a bear market recovery time from an index to a whole portfolio runs straight into the next question — whether everything else recovered on the same clock. Mostly it didn't, and gold's own 45-year real drawdown record is the sharpest illustration available.