Working With First Trust's Market Cycle Research
First Trust has put out a decent amount of material on the history of bull and bear markets, usually bundled into their ETF research section and their broader macro outlooks. The topic itself isn't rocket science — it's basically a compilation of historical drawdown periods, recovery timelines, and sector rotation patterns across different regimes. What makes it useful is when you stop treating it like a history lesson and start treating it like a reference manual. The main piece lives on their website under research or insights. It's not always the easiest thing to locate because First Trust organizes their content by fund family rather than by topic. You'll typically find it near their ETF overview pages. I usually end up searching the site directly for the phrase rather than digging through their navigation menu, which tends to lead you into sales pages for specific funds instead. There's no single downloadable PDF that covers everything. What exists is a collection of short papers and data snapshots scattered across their site. If you're looking for one comprehensive document, you're going to be frustrated. The information is real and useful, just fragmented.
What The Research Actually Says
The core content breaks down US equity market cycles since 1926, roughly. It covers average bull market duration, average bear market duration, sector performance during each phase, and how different asset classes behave when the cycle flips. Some of the data overlaps with broader historical analyses from sources like Ibbotson or morningstar, but First Trust's angle is more practical — they tie it back to how ETF investors should position. Here's what stands out from the data. Bull markets in the US have averaged around five to six years since World War II, with a few notable exceptions. Bear markets have averaged roughly one to two years. The 2008 financial crisis was an outlier on both ends — the bear lasted about eighteen months but the recovery took nearly four years to return to pre-crisis levels. More recently, the 2020 bear market lasted about two months, which is essentially a blip, and the subsequent bull has been one of the longest on record. What the research doesn't emphasize enough is that these averages are heavily influenced by the period you're measuring from. If you start in 1982, you get a very optimistic picture of bull market longevity. If you start in 1970, it looks different. This is a common pitfall I see people miss. The averages shift depending on where your window begins.
How To Actually Use This Stuff
I don't read these reports for the history. I read them for the duration context. When a bear market hits, the first question anyone asks is how long it will last. The historical data gives you a range, not a date. That's the distinction that matters. For positioning, the research points toward sector rotation patterns. During the later stages of a bull market, defensive sectors like utilities and consumer staples tend to outperform. During early recovery from a bear market, cyclicals and financials typically lead. This isn't original thinking from First Trust — it's well-documented — but having it compiled alongside actual duration data makes it easier to act on. One thing I found useful in practice: when I was managing a portfolio through the 2022 downturn, I pulled the historical data on how long bear markets typically last and what sectors outperformed in the six months following the trough. That gave me a framework for not panic-selling into the bottom. The research showed that approximately seventy percent of bear market recoveries had posted positive returns within six months of the trough. That number alone is enough to make you hesitate before selling everything at a low.
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The Limitations Nobody Talks About
The biggest problem with this kind of historical analysis is that it assumes history rhymes. Sometimes it does. Sometimes it doesn't. The 2000 dot-com crash looked nothing like the 2008 financial crash, and both looked nothing like what happened in 2020. Each cycle has its own drivers — interest rate environment, geopolitical context, monetary policy stance — and no historical average captures that. Another limitation: the data tends to focus on large-cap US equities. If you're invested in international markets or small caps, the duration patterns change significantly. The research briefly acknowledges this but doesn't go deep enough for anyone building a global allocation. I ended up cross-referencing with MSCI world data to fill in the gaps for my international exposure, which took about twenty minutes of additional work. There's also a selection bias issue. First Trust sells ETFs. Their research naturally leans toward explanations that support a buy-and-hold, diversified ETF approach. That's not dishonest — it's just their business model. The material is still useful, but you should read it with the understanding that it's coming from a fund provider with a product agenda.
A Practical Workaround I Developed
When I needed cleaner historical comparisons for my own use, I stopped relying solely on First Trust's summaries and started pulling raw data from FRED and the CRSP database to rebuild the cycle charts myself. It took me about two hours the first time, but once I had the spreadsheet set up, updating it for each new market cycle took me maybe fifteen minutes. The difference is that I could adjust the parameters — start date, sector filters, including or excluding specific events — instead of being stuck with whatever time window First Trust chose to highlight. If you're going to use the First Trust material seriously, I'd recommend doing the same. Treat their research as a starting point, not a conclusion. The historical data exists in public sources. The value add is in how you format it for your own decision-making.
