December 16, 2024
It’s apparent we have a politically divided nation. That said, for many Americans, the future is bright. They’re reveling in the fact that Donald Trump won the presidential election, and that Republicans swept Congress.
But what is the chance a second President Trump will serve four years and there won’t be a bear market throughout his entire term? Or what is the chance he serves four years and there won’t be a recession during that time?
I turned to AI for the answers by asking one of the well-known chatbots.
It said bear markets have occurred roughly every three to five years, historically. For bear market cycles, the average duration is around a year or two, though that can vary quite a bit. On average, the stock market experiences a bear market about every 3.5 years.
Given this, the probability of a bear market is somewhat high. The bot said the historical frequency of bear markets suggests a 30%-40% chance of one occurring in a given four-year span.
Considering we haven’t had a recession in the last 16 years (I’m excluding the COVID one because it was a minor blip), it would seem chances are elevated that one will happen. I mean, if you haven’t had recession in four years, is the probability higher?
The way people are behaving right now, you’d think it’s guaranteed stocks and the economy will grow and be fruitful over the next four years during the biggest boom in history.
That might happen. But it might not.
We should probably be patient. In my experience with these sorts of things, it takes time for economic policies to set in.