Bear Market 2000 – 2002
On this page, you will find charts, which are illustrating the trends of important indicators during the bear market downturn from 2000 to 2002. Other references to this bear market are “dot-com bubble burst” and “irrational exuberance”.
An era of exuberant speculation in dot-com companies, dot-com startup bankruptcies, and corporate accounting scandals lead to one of the most prolonged bear market declines of the post-WWII era.
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Bear Market 2000 – 2002 – Overview
On 03/24/2000, the broad US stock market index S&P 500 reached a high of 1552.87 index points at US market close before declining to a low of 768.63 points on 10/10/2002. The S&P 500 index lost 50.50% during this bear market.
In spring 2003, the low was tested once again, and the bear market came to an end.
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S&P 500 Index – Bear Market 2000
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S&P 500 Index – Implied Volatility – Bear Market 2000
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Some Possible Reasons for the Bear Market 2000 – 2002
- Greed or so-called “Irrational Exuberance” – copyright by Alan Greenspan, who used this expression in the course of his speech “The Challenge of Central Banking in a Democratic Society” at the Annual Dinner and Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research, Washington, D.C. on 5th of December 1996:
“But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?“
- Significant deteriorating “market breadth”, such as the advance-decline-line, because of non-confirmation of new all-time highs of stock index
- Rapidly declining dividend yield
- High price/earnings ratio (P/E)
Bear market 2000 – Key Market Indicators
US Treasury Bills
Treasury Bonds
US Treasury Bond Futures
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US Dollar
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Price-Earnings-Ratio (P/E Ratio)
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Dividend Yield
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Market Breadth – Advance-Decline Line
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Market Breadth – New High and New Lows
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Gold
Commodities
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