Bank of America’s Projections for Current Market Scenario Based on 19 Bear Markets in the Last 140 Years of Stock Market History

Bank of America’s Projections for Current Market Scenario Based on 19 Bear Markets in the Last 140 Years of Stock Market History

May 21, 2022 0 By Keith Jacobs

The stock markets and investors of the United States are braving the shock of the recent losses. The financial market analysts from Bank of America recently created a report based on the projections and historical data from 19 bear markets spanned over 140 years of Stock Market history. To get a better idea of the dire situation of financial markets, it suffices to quote the bank that $3 out of every $100 position has been lost.

Meanwhile, the S&P 500 index is also out of sorts, although the experts claim that the index has still not started on an official bearish route. It is worth noting that financial experts formally declare a bear market when a specified market or an asset class cascades by 20% from a bullish track. At present, S&P 500 is down by 13.5% from its January position. Meanwhile, NASDAQ has been facing a 23% downtrend since November last year.

S&P500 Index 

According to financial experts, the movements of the S&P500 Index are ticking all the checkmarks that signal an upcoming bear market. Regardless of the expert’s opinions, the traders and investors are still not convinced on the matter of the bear market judgment. Wall Street giants like Morgan Stanley have also iterated that markets are within proximity of a bear market.

Michael Hartnett, the financial strategist from Bank of America, recently published a report to settle the matter. In his report, he shared the projections and market behavioral data from 19 previous bear periods during the last 140 years. According to Hartnett, an average price decline of 37.3% continued for 289 days can be seen as the bear market’s maximum duration and damage.

Hartnett admittedly claimed that past projections of the financial markets are not a reliable way to predict the acting forces on the stock markets at present. At present, the economic factors and the way that investors interact with financial markets and exchange information has changed drastically over the last 140 years. However, Hartnett maintained that in the light of previous bear market data, the current recession period could last up to October this year.

He also claimed that the current year could see S&P500 sitting at 3000 and NASDAQ could be at 10,000 points in the light of his findings. He, however, added good news claiming that typically the bear markets era is shorter in comparison to the bull markets. Hartnett and his team pointed out that since last year around $1.1 trillion in revenue has flowed into the equities markets; therefore, the investors and stock markets can be considered out of or at least at a safe distance away from the territory of the hot water.