At the end of nearly every bear market, some investors and media warn of a potential for a double-dip—meaning stocks could tank again even after a recovery has seemingly begun. While markets have retested lows in bear markets past, Fisher Investments’ Founder Ken Fisher says it’s crucial to look at the individual bear market and economic environment to see whether it’s likely today or not. Ken Fisher explains that this bear market was the fastest in history—falling from all-time highs to lows in just 16 trading days. The market then recovered much of those losses in the following couple months. Ken says one reason we may not see a double-dip this time is because of the strength of the recovery so far.
Looking at all bear markets through history, Ken says there aren’t any examples of double-dips that recovered to the magnitude this one has before retesting their lows. While there have been some instances where early in a bear market there seems to be a recovery before further declines, Ken Fisher explains how none of those saw an initial drop as deep as the one markets experienced in Spring 2020. This bear market and recovery could always be different, but Ken doesn’t believe a double-dip bear market is the mostly likely outcome today.