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Beware the Bear Market Rally

With the Dow , S&P 500 and NASDAQ all up over 25% since their March lows, there has been a lot of talk

about "green shoots" and the recovery. In fact, the lead story in today's Wall Street Journal is titled "World Regains Taste for Risk." But is this appetite for risk premature? In volatile times, markets swing up and then back down. Here is a look back at some of the biggest bear market rallies in history.

Sure there is money to be made during these rallies, but proceed with caution. If history is any lesson, it takes plenty of time to recover from big drops. Last fall, there were comparisons made to the Great Depression. Back then, the market gave its best trap in history.

Crash of 1929

  • Market peak -- the Dow hit 381.17 on 9/3/1929
  • Market crash -- 10/28-29/1929, the Dow fell 23.6% over the two days going from 301 to 230
  • Presumed low -- 11/13/1929, the Dow closed at 198.69, a fall of 47.9% from the September high
  • Rally -- the Dow rallies to 294.07 or up 48% by April 17, 1930
  • BEAR TRAP -- the Dow proceeds to plummet to 41.22 (yes, you read it correctly) by 7/8/1932, down 86% from the rally high of 1930 and down 89% from its 1929 high
  • Recovery -- it took until November 1954 for the Dow to get back to its 1929 highs

Bear Markets of 1940s, 1960s, 1970s and more

Bear Market of 1946: A series of ups and downs

  • Market peak -- 5/29/1946, Dow hit 212.5
  • Market trough -- 10/9/1946, Dow fell to 163.12, a 23% drop
  • BEAR TRAP -- Dow rallied to 184.06 by 2/11/1947, gaining 13%
  • Market trough -- 5/19/1947, Dow fell back to 163.55, an 11% drop
  • BEAR TRAP -- Dow rallied to 185.6 by 7/14/1947, gaining 13%
  • Market trough -- 6/11/1948, Dow fell back to 165.39, an 11% drop
  • BEAR TRAP -- Dow rallied to 192.96 by 6/11/1948, gaining 17%
  • Market trough -- 6/13/1949, Dow fell back to 161.6, a 16% drop
  • Recovery -- it took until April 1950 for the Dow to get back to its 1946 highs
Bear Markets of 1960s, 1970s and more

Bear Market of 1961

  • Market peak -- 12/13/1961, Dow hit 734.91
  • Market trough -- 6/26/1962, Dow fell to 535.76, a 27% drop
  • BEAR TRAP -- Dow rallied to 615.54 by 8/22/1962, gaining 15%
  • Market trough -- 10/23/1962, Dow fell back to 558.06, a 9% drop
  • Recovery -- it took until September 1963 for the Dow to get back to its 1961 highs

Bear Market of 1966

  • Market peak -- 2/9/1966, Dow hit 995.15
  • Market trough -- 10/7/1966, Dow fell to 744.32, a 25% drop
  • BEAR TRAP -- Dow rallied to 983.34 by 12/2/1968, gaining 32%
  • Market trough -- 5/26/1970, Dow fell back to 631.16, a 36% drop
  • Recovery -- it took until November 1972 for the Dow to get back to its 1966 highs
Bear Markets of 1970s to Today

Bear Market of 1973

  • Market peak -- 1/11/1973, Dow hit 1051.7
  • Market trough -- 12/6/1974, Dow fell to 577.6, a 45% drop
  • Rally -- Dow rallied to 1009.21 by 3/24/1976, gaining 75%
  • Market trough -- 2/28/1978, Dow fell back to 742.12, a 26% drop
  • Rally -- Dow rallied to 1024.05 by 4/27/1981, gaining 38%
  • Market trough -- 8/12/1982, Dow fell back to 776.92, a 24% drop
  • Recovery -- it took until November 1982 for the Dow to get back to its 1973 highs

Bear Market of 2000: Internet bubble followed by 9/11

  • Market peak -- 1/14/2000, Dow hit 11722.98
  • Market trough -- 3/7/2000, Dow fell to 9796.04, a 16% drop
  • Rally -- Dow rallied to 11310.64 by 9/6/2000, gaining 15%
  • Market trough -- 3/22/2001, Dow fell back to 9389.48, a 17% drop
  • Rally -- Dow rallied to 11337.92 by 5/21/2001, gaining 21%
  • Market trough -- 9/21/2001, Dow fell back to 8235.81, a 27% drop after the 9/11 attacks
  • Rally -- Dow rallied to 10635.25 by 3/19/2002, gaining 29%
  • Market trough -- 10/9/2002, Dow fell back to 7286.27, a 31% drop
  • Recovery -- it took until April 2006 for the Dow to get back to its 2000 highs