How Bad Can It Get?

A lot of what is taken for gospel about bear markets isn't true. The downturns aren't as bad as they seem when you include the effect of dividends.

Before you bail out of stocks -- or start to invest again -- it may be worthwhile to look closely at stock-market history. How bad can the stock market get? How long does it take for you to get even after you hit bottom? The market's history offers valuable clues.

A lot of flawed information about the extent and duration of bear markets is being disseminated today. The information is faulty -- or at least misleading -- because it fails to account for the impact of dividends when computing total returns. Let's look at the real story (the data for this article was supplied by Ibbotson Associates, a subsidiary of Morningstar, the mutual fund tracker).

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Steven Goldberg
Contributing Columnist,
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or