200 Years of Bull and Bear Markets

200 Years of Bull and Bear Markets


Dr. Bryan Taylor, Chief Economist, Global Financial Data




               Global Financial Data (GFD) has extended its coverage of Bull and Bear Markets to begin in 1800 rather than 1900. GFD has the most extensive coverage of stock markets available anywhere in the world. 


Global Financial Data tracks bull and bear markets in over 100 stock markets.  GFD has over 400 years of data to analyze when bull and bear markets began and ended and the number of market tops and bottoms that have occurred each year worldwide. GFD defines a bear market as a 20% decline in the primary market index for each country and a bull market as a 50% increase in the primary market index.  A market bottom occurs when the index declines by 20% or more after a 50% increase, and a market top occurs when the market rises by 50% or hits a new high after a 20% decline.  


With our coverage, GFD has calculated the timing of bull and bear markets for each country since that country started trading.  GFD has created indices for stock markets for each country, and has used data from London and other European exchanges to extend data series for markets back into the 1800s. Market indices for India, Brazil, Mexico, Australia, South Africa and other countries begin in the 1820s and 1830s, long before exchanges opened up in those countries because stocks from those countries traded in London, Paris or Amsterdam.


Most of the data that are used to calculate market tops and bottoms are monthly or daily in frequency.  The problem with pure annual data is that a bear market could occur within a single year and bounce back so that annual, end-of-year data would not capture the occurrence of the bear market.  This occurred in 2020 when the COVID pandemic caused markets to collapse in February and March of 2020, but markets recovered by the end of the year.


Additions to the Database


               GFD has both added a new index detailing the number of markets that GFD covers each year and has extended the coverage of three of the indices covering market tops and bottoms.


               The new index provides information on the number of markets that GFD provides calculations on bull and bear markets in each year. Figure 1 shows the number of markets that GFD covers from 1602 until 2022. Starting at one market (Amsterdam) in 1602, by 1800, there were five markets for which data were available; however, the number of markets grew during the 1800s, rising to a dozen by 1825, 20 by 1856 and 33 by 1900.  The number of countries peaked at 43 in 1929, but declined after World War II when stock markets were closed by Communist governments.  The count fell to 37 in 1946, but grew steadily thereafter. Most of the growth occurred in the 1980s and 1990s when globalization and the fall of communism led to the opening of exchanges throughout the world.  There were 52 countries with stock indices in 1980, but 97 by 2000, not far short of the current 106.


Figure 1.  Countries With Indices Covered in the GFDatabase


               GFD has also extended its calculation of when bull and bear markets occurred back to 1602 when trading began in East India stock on the Amsterdam Stock Exchange.  We have calculated the date of the tops and bottoms for every market in the world over the past four centuries.  Before 1800, there were five or fewer markets so information on the timing of tops and bottoms is sparse.  The data for these series begin in 1800 and continue until 2022.  We provide data on both the number of market tops in each year, the number of market bottoms in each year, and the net tops minus bottoms in each year.


Although global markets in the 1900s are well documented, global markets in the 1800s are less well known.  No stock market indices were calculated in real time until Dow Jones introduced his averages in 1885, The Banker’s Magazine introduced its UK indices in 1887 and stock market indices for the rest of the world weren’t introduced until after World War I.  Daily indices weren’t introduced in many countries until after World War II. Any indices that cover markets before World War I have to be recalculated by collecting data on individual companies and using data on stock prices, dividends, corporate actions and shares outstanding to calculate cap-weighted price and return indices for each country, which GFD has done.


Figure 2. Stock Market Tops by Year, 1800 to 2022.


Figure 2 shows the number of market tops that occurred in each year since 1800.  Most people would expect that there were market tops, followed by a bear market, in 1920, 1929, 1937, 1969, 1973, 1980, 1987, 1994, 2000, 2007 and 2018/2020.  But when were there market tops in the 1800s? Few people know. The advantage of this indicator is that it allows you to look at markets across the world to understand when markets topped out simultaneously and better understand the coordination between global markets.  Of course, markets were not as integrated in the 1800s as they were in the 1900s or 2000s, but the Panics in 1857 and other years spread throughout the world.


The years in which markets topped out in the 1800s were 1825 when there was a crash among South American stocks and bank failures in England, in 1845 when the railroad boom peaked, in 1862 as a result of wars and rising commodity prices, in 1881 when the Union Generale crash occurred in Paris, and in 1889 as the “Long Depression” went into its final phase.