Catherine Yoshimoto
Cycles Offer Market Perspective: Since 2000, the Russell 3000 has gone through five bull and five bear cycles. Bull markets were three times longer and more rewarding on average.
The 2025 Dip Is Not Yet a Bear Market: Despite a sharp drop triggered by tariffs, the 2025 downturn (-8.26%) doesn’t yet qualify as a bear cycle under FTSE Russell’s 15% threshold.
Tactical Rotation Could Reduce Risk: Switching between Russell growth and value indexes at cycle turning points may offer a lower-risk way to navigate U.S. equity exposure.
After hitting a peak in February 2025, US equity markets went into a sharp decline following the announcement of widespread import tariffs by the new Trump administration.
By mid-May, the Russell 3000 index had recovered most of its losses, responding to a softening of the proposed tariff rates.
We don’t know whether the “tariff tantrum” is over. But in a longer-term equity market context, so far it hardly registers.
In the chart below, we’ve broken down the US equity market’s most recent 25-year performance into cycles, using monthly data for the Russell 3000 total return index.
[The Russell 3000 is FTSE Russell’s flagship benchmark for the entire US stock market. It’s the sum of the large-cap Russell 1000 index and the small-cap Russell 2000 index. Together, the Russell US Indexes have over $10trn in associated assets under management.]
Using monthly, rather than daily data, allows us to minimise noise when looking at past performance. In turn, zooming out in this way helps us identify cycles.
We start the analysis at one of the major cyclical equity market turning points so far this century: the end of February 2000, just as the late 1990s technology bubble sprang a leak.
In our analysis, we define a cycle as an index move of more than 15% in either direction: an increase of more than 15% from the most recent trough (in the case of a bull cycle); or a decrease of more than 15% from the most recent peak (in the case of a bear cycle).
US equity market cycles since February 2000
Cumulative total returns, based on Russell 3000 total return index (monthly data)
Source: FTSE Russell. Russell 3000 total return index monthly data from 29/2/2000-30/4/2025. Past performance is not a guide to future returns. Please see the end for important legal disclosures.
Five bull cycles, five bear cycles
What can we observe in the chart? Between end-February 2000 and end-April 2025, there were five bull cycles and five bear cycles of varying durations and amplitudes.
Notably, three bull cycles recorded cumulative total returns of more than 100%:
- The 26-month recovery from the Global Financial Crisis (March 2009 to April 2011, +100.5%);
- The 60-month mid-noughties bull market (October 2002 to October 2007, +115.6%);
- And the 99-month bull market that ended just before the outbreak of Covid (October 2011 to December 2019, +234.2%).
- And there were two significant bear cycles, each recording cumulative declines of more than 30%:
- The 16-month decline during the Global Financial Crisis (November 2007 to February 2009, -51.2%);
- And the 31-month deflation of the late-90s tech bubble (March 2000 to September 2002, -38.6%).
Bear cycles were shorter and sharper
The old saying is that stock markets “take the stairs up and the elevator down”.
Our analysis bears this out. The average length of a bull cycle in the Russell 3000 Total Return index (47 months) was over three times as long as an average bear cycle (13 months). However, the bull cycles recorded an average monthly return of 1.7%, while bear cycles had a much steeper downwards gradient (-2.8% per month).
Tariff tantrum doesn’t register yet
Where does the 2025 tariff tantrum register on the chart? So far, it doesn’t merit the label of a new bear cycle.
The three-month cumulative return of the Russell 3000 total return index (to end-April 2025) was -8.26%. As a result, this period is still attached to what we’ve called the “Magnificent Seven Concentration” bull cycle.
Starting in October 2022, that cycle had lasted 31 months by April 2025 and recorded a cumulative gain of 58.2%.
If US stocks decline further, it’s possible that the peak of the Magnificent Seven cycle was in January 2025 and we entered a new bear cycle at that point. But we don’t know that yet.
In a separate blog, we look at the relative performance of the Russell 1000 (large-cap) and Russell 2000 (small-cap) growth and value indexes over the ten cycles we’ve described in this blog.
Even though it’s interesting to look at the upwards and downwards movements of the stock market through the lens of cycles, few investors dare to try and time them.
But the last 25 years’ performance suggest that switching between the Russell indexes’ growth and value stocks at possible cyclical turning points could offer a lower-risk way of gaining exposure to the world’s largest stock market.
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