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The 2000-01 Nasdaq Bear Market
updated 03/04/2001
| After a couple of years of historic gains, the
Nasdaq has suffered a devastating bear market in 2000 and 2001. We
have recent charts of the Nasdaq bear market at our Nasdaq
Crash page, but we thought we would compare the 2000-01 Nasdaq bear
with the huge Nikkei bear market that started on 1990. The Nikkei is
the most widely quoted index for Japan's stock market.
This chart shows the current Nasdaq bear market
compared to the Nikkei bear market: |
| The black line shows the Nikkei bear market that
started on January 1st, 1990. That bear market is still
grinding on. The magenta line is the Nasdaq bear market that started
on March 11th, 2000.
A few explanations about this chart. The lines
show the percentage drop from the highs made before each bear market
started.
The numbers across the bottom are the number of
days that have passed since the market top. In the case of the Nikkei,
it has been approximately 2600 trading days (over 10 years) since it
saw all time highs.
As you can see, the Nasdaq bear market is a
newbie compared to the Nikkei bear
Here is a closer look: |
| Once again, this chart shows the percentage drop
from the highs. As you can see, the Nasdaq bear market is now actually
ahead of pace that the Nikkei bear market set almost
eleven years ago.
To give a bit more perspective, we backed up the
chart to show a portion of the rally up to the highs that preceded
these bear markets: |
As you can see, the rise in the
Nasdaq in the three years before the top was far steeper than the rise
in the Nikkei. What this means for the future is unclear. But there
were clearly some excesses in the Nasdaq. For
our final study, we decided to look at some past bear markets the
Nasdaq has suffered through: |
| We built this chart the same way
as the charts above, with percentage change plotted against the
length of the bear market (measured in days).
One thing jumps right out. The current bear
market is the worst for the Nasdaq since the bear of 1973-1974.
And this decline has been more abrupt than any other (except
possibly 1987).
Here are some stats on the bear markets:
| |
Percent
decline |
Length
(in days) |
| 1973 |
-59.9% |
473
days |
| 1983 |
-31.5% |
280
days |
| 1987 |
-35.9% |
45 days |
| 1989 |
-33.0% |
259
days |
| 2000-01
(so far) |
-58.1% |
247
days |
The length is measured from the high to the
low. The percent decline is on a closing basis, from the high to
the low.
It is tough to draw any conclusions from
that last chart and table, other than the fact that this is
clearly a historic bear market. In terms of percentage decline, it
is right up there near the top. In terms of duration, we might
have a ways to go.
If you want to get this type of
research (and our current analysis of the market), make sure you subscribe to the 100% FREE Walker Market Letter. |
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