Truth of a bad day in the markets

I had the chance to connect with a retirement expert Marc Rogers to discuss the history of the markets and what it may mean moving forward.

Looking back at the past few years of historically low interest rates and policies that have helped borrow money cheaply, it’s easy to see why many can only remember what it’s like to live in a bull market. Marc shared with me some key insights that can help understand the history, current climate and financial environment we may have ahead of us.

From Marc :

“The S&P 500 reached an all-time high (3.385) on February 19, 2020, then fell 34% at the start of the COVID-19 pandemic in March 2020. This raised fears that the next bear market had begun, but after recovering so quickly, he was named the shortest bear in history We fully recovered and then some, surpassing February’s [of 2020] high and even reaching over 4,700 in early November 2021, an increase of almost 39% compared to pre-COVID figures.

More recently, the fear of inflation has taken hold and renewed fears that this bull market is coming to an end have been renewed.


At 12 years, the longest bull market ever, many have almost forgotten how both financially disastrous and overwhelming a bear market can be. The typical definition of a bear market is a market that is down 20% or more, over two or more months, often combined with widespread economic pessimism or even a recession. The average bear market lasts 289 days (9.5 months); however, some have lasted for years.

The Great Depression lasted over five years, from March 1937 to April 1942, with the market losing 54% of its value, but was preceded by the stock market crash of 1929 as well as seven other crashes in the eight years that followed, each with declines of 29% to 61%. This downtrend cycle only came to an end with the onset of World War II. After our long bull market, it’s not impossible to imagine an extended bear market starting with our one bad day, possibly lasting for years.


For more than 40 years, the average daily market volatility for the S&P 500 and the Dow has been around 1.4%. This translates into fluctuations of around 65 points for the S&P 500 and 510 for the Dow; however, it is nowhere near the height of the market madness.

The current market has some similarities to what happened in 1987; there had been a prolonged bull market from 1982 to 1987, with US markets rising 251%; 1987 alone saw a 69% rise from the start of the year to August 1987. World markets followed suit, also rising 296% over the same period. Then the worst happened.

October 19, 1987 earned the chilling nickname Black Monday because the markets suffered their worst single-day decline of 22.61%. Eight USD-denominated markets saw declines of 20-29%, while Hong Kong, Australia and Singapore all fell more than 40%. Worldwide losses were estimated at $1.7 trillion in 1987 dollars, or $4.1 trillion today. There were ten times the average number of margin calls that day, and panic set in.

Imagine the S&P 500 falling from its current 4,700 points to 2,547 points in a single day, fortunes fell by a quarter in one day for almost all investors, and almost half for those in other markets (Hong Kong most affected); all on Black Monday. Although currently there are stopping measures, they can only slow down the fall, but not prevent it.


When we think of bear markets, we only think of stocks; however, bears will often have broader impacts than stocks.

After the crash of 1929, the housing market collapsed, losing over 66% of its value, with bank lending also declining. In nominal terms, the typical property purchased in 1920 retained only 56% of its original value two decades later.

At the height of the Great Depression, in May 1933, unemployment reached 25.6%, and from 1930 to 1933 about 9,000 banks failed, including 4,000 in 1933.

For a single bad day, these kinds of numbers are not unimaginable. There hasn’t been a wave of bank closures, but there’s been a lot of regional bank consolidation. During the COVID pandemic, the unemployment rate was above 14%, and that real number may have reached 20%. The housing market has gone gangbuster with low rates, but the bubble could burst.


Unfortunately, due to a bad day, all of the above mentioned items are not just within the realm of possibility. All have been seen before, and while some regulations have been tightened to protect the investor, those same rules have been relaxed and the financial industry has found ways to circumvent the rules putting many of their investors at risk. So what should the savvy investor do?

Fixed annuities provide capital protection, meaning you can’t lose your money if stocks, banks or even real estate fail. An annuity holder earns either interest OR nothing, but never loses. A Fixed Index Annuity (FIA) gives the holder tax-free growth, designed explicitly for bear markets. Many offer income with premium protection against market volatility, which means there is upside potential, but no downside risk in premium. In a bear market, you will gain stability with an AIF and have an upside opportunity when the market eventually turns.

AIFs can be a planning vehicle for your retirement savings and are most useful when markets are experiencing the steepest declines. They combine tax deferral with cash flow and annuity payment options. Annuities offer their holders flexibility, allowing the purchaser to begin receiving payments in as little as one year, or to defer payments until a predetermined point in the future. Since annuities are a type of insurance, the full accumulation value is available upon the policyholder’s death, allowing heirs to avoid probate. Finally, with annuities, you can have a fixed account option that guarantees you a certain amount to pay each month, no matter what happens with the markets.

Stocks, mutual funds, ETFs and other investment vehicles can decline with market volatility. AIFs are linked to various indices such as the S&P 500, but do not participate in the downside risk of the index. The following shows the risk profile that many investments offer. You can see that annuities and AIFs can offer some of the best returns with minimal downside risk.

Investment Risk Profile Table

Annuities are for someone trying to create a base for conservative growth, while working on a quick financial strategy. This strategy can guarantee you a stream of income for life.


While a bad day can be a disaster for many, it may not be for you. There will finally be an end to our record bull market and with it the potential to erase much of the gains investors have seen for over a decade.

Dealing with this threat is especially vital for those approaching retirement. Work with your financial advisor on annuity options that can allow you to continue to profit from the market, while avoiding catastrophic losses when the inevitable bad day hits.”

Talking with professionals such as Marc Rogers and amplifying their thoughts brings us all to a better understanding of what can happen, but also in the advising space on how we can better prepare our clients.

Marc Rogers is the founder of Prospecting producersa unique solution to modernize financial practices.

To learn more about Marc and myself, log on to the Be advised podcast episode where I sit down with Marc and discuss marketing and branding for financial advisors. listen now

Brad Pig Heart: Author, speaker and creator and host of a leading financial marketing podcast Be advised

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.