In reality, this one is likely to be right at the top of the scale. Some bear markets are relatively mild (the 19.3pc correction over six weeks in 1988 was the smallest of the post-war era) while others are a lot more severe (the 56pc drop over 18 months in 20 was the worst since the 1930s). If that is a guide, we will see another 10pc fall, and it will all be over by the time Christmas comes around.
On average they lasted 11.4 months, with an overall fall in the index of 29.4pc. According to LPL Financial, there have been 17 bear markets, or near-bears that include 19pc-plus falls, since the end of WWII. How bad will it get? The historical record suggests we have already taken most of the hit. Against that backdrop, it is hardly any surprise that investors are getting out. The outlook is as bleak as it has been at any point in the last 50 years and possibly worse. The war in Ukraine has sent commodity prices skywards, and will cause widespread shortages while lockdowns in China will cut off the supply of manufactured goods and key components. Inflation has taken off and will depress demand as real wages fall. After more than a decade of pumping money into the economy, central banks have finally turned off the printing presses, and started putting interest rates up again. Add it all up, and right across the world investors are getting out of the market as fast as they can. We have just been helped by the fact we never really joined the bull market. Our economy looks in as bad shape as any, and arguably worse. But we should not kid ourselves that we are going to escape the sell-off. The FTSE has held up reasonably well, down by a trivial 1pc so far this year. The Meme stock index, which includes all the companies that generate the most social media activity, is down by an alarming 49pc over the course of 2022 so far (yet more proof that you shouldn’t use Twitter as a guide to anything, and certainly not for investing). The high-flying FAANG stocks - standing for Facebook, Apple, Amazon, Netflix and Google - that led the market higher for so many years have crashed by 35pc since January. The Nasdaq index is already deep into a bear market, down by 28pc since the start of the year. The carnage in the stock market does not show any signs of letting up any time soon. Add it all up and the market rout could well turn into one of the worst in post-war history. Why? Because bear markets triggered by recessions are always the worst, and we are now heading for a deep downturn because valuations were already crazily over-stretched at the peak and because policy-makers are completely out of ammunition to counter the sell-off in equities. There have been 17 since the end of World War Two, and they typically last close to a year, with share prices falling by 30pc.
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