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Topical Research – Bear Market Trends

- February 28, 2022

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S&P 500 LONG-TERM GROWTH

Despite the risks, it is important to keep perspective

RETURNS AND DRAWDOWNS

Despite headlines, unprecedented policy support helped 2021 become one of the least volatile years for stocks in half a century; 2022 has gotten off to a rockier start

HISTORICAL BEAR MARKETS & RECOVERIES

Bear markets are inevitable, but they don’t last forever

BULL AND BEAR MARKET CYCLES

U.S. bull market cycles tend to last longer than and outperform bear market drawdowns

SPRINGTIDE EQUITY SENTIMENT COMPOSITE

U.S. equity sentiment has dropped to 36%, the lowest reading since March 2020

STOCKS VS MOVING AVERAGE

The percentage of stocks above their 200-Day M.A. has been falling since December of 2020

U.S. EQUITY VALUATION

U.S. equity valuations remain stretched, but strong earnings growth has closed the gap dramatically since the start of the 2021

S&P 500 TECHNICAL LEVELS

Markets have pulled back from ATH’s, but are still some way away from a bear market; interestingly, bear market level is inline with LT average market valuation

STOCKS VS CREDIT

Credit tends to lead equities on the way out of bear markets

STOCKS VS LABOR MARKET

Labor is a lagging indicator: by the time the labor market bottomed in 2010, the stock market was already up almost 70%

CURRENT DRAWDOWN VS HISTORIC BEAR MARKETS

Current drawdown vs. historic bear markets

STOCKS VS WARS

Historically the stock market has performed well post the start of a war/invasion

THE GREAT DEPRESSION

Bear Market Anatomy: 1929 Crash & Great Depression

1987 CRASH

Bear Market Anatomy: 1987 Crash

TECH BUBBLE

Bear Market Anatomy: Tech Bubble Bursting

TGLOBAL FINANCIAL CRISIS

Bear Market Anatomy: Global Financial Crisis

CORONAVIRUS CRISIS

Bear Market Anatomy: Coronavirus Crisis

CURRENT MARKET DRAWDOWN

Could the current market drawdown be the start of a new bear market, or is this simply a correction?

EQUITY RETURN CONTRIBUTION

Recent cycle returns have largely been driven by valuation changes, which has contributed to volatility

DISCLAIMER

Magnus Financial Group LLC (“Magnus”) did not produce and bears no responsibility for any part of this report whatsoever, including but not limited to any microeconomic views, inaccuracies or any errors or omissions. Research and data used in the presentation have come from third-party sources that Magnus has not independently verified presentation and the opinions expressed are not by Magnus or its employees and are current only as of the time made and are subject to change without notice.

This report may include estimates, projections or other forward-looking statements, however, due to numerous factors, actual events may differ substantially from those presented. The graphs and tables making up this report have been based on unaudited, third-party data and performance information provided to us by one or more commercial databases. Except for the historical information contained in this report, certain matters are forward looking statements or projections that are dependent upon risks and uncertainties, including but not limited to factors and considerations such as general market volatility, global economic risk, geopolitical risk, currency risk and other country-specific factors, fiscal and monetary policy, the level of interest rates, security-specific risks, and historical market segment or sector performance relationships as they relate to the business and economic cycle.

Additionally, please be aware that past performance is not a guide to the future performance of any manager or strategy, and that the performance results and historical information provided displayed herein may have been adversely or favorably impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be inferred that these results are indicative of the future performance of any strategy, index, fund, manager or group of managers. Index benchmarks contained in this report are provided so that performance can be compared with the performance of well-known and widely recognized indices. Index results assume the re-investment of all dividends and interest and do not reflect any management fees, transaction costs or expenses.

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DEFINITIONS

Asset class performance was measured using the following benchmarks: U.S. Large Cap Stocks: S&P 500 TR Index; U.S. Small & Micro Cap: Russell 2000 TR Index; Intl Dev Large Cap Stocks: MSCI EAFE GR Index; Emerging & Frontier Market Stocks: MSCI Emerging Markets GR Index; U.S. Intermediate-Term Muni Bonds: Bloomberg Barclays 1-10 (1-12 Yr) Muni Bond TR Index; U.S. Intermediate-Term Bonds: Bloomberg Barclays U.S. Aggregate Bond TR Index; U.S. High Yield Bonds: Bloomberg Barclays U.S. Corporate High Yield TR Index; U.S. Bank Loans: S&P/LSTA U.S. Leveraged Loan Index; Intl Developed Bonds: Bloomberg Barclays Global Aggregate ex-U.S. Index; Emerging & Frontier Market Bonds: JPMorgan EMBI Global Diversified TR Index; U.S. REITs: MSCI U.S. REIT GR Index, Ex U.S. Real Estate Securities: S&P Global Ex-U.S. Property TR Index; Commodity Futures: Bloomberg Commodity TR Index; Midstream Energy: Alerian MLP TR Index; Gold: LBMA Gold Price, U.S. 60/40: 60% S&P 500 TR Index; 40% Bloomberg Barclays U.S. Aggregate Bond TR Index; Global 60/40: 60% MSCI ACWI GR Index; 40% Bloomberg Barclays Global Aggregate Bond TR Index.