Few words in investing carry the same weight as “bear market.” For wealth advisors, the term evokes some of the darkest chapters in financial history—the 2008 financial crisis, the dot-com collapse of 2000, and of course the 1929 crash that ushered in the Great Depression.
In each of those downturns, equity values were decimated in a matter of months, with recovery taking years. These memories fuel client anxiety whenever markets fall 20% or more, the standard definition of a bear market.
But there’s a growing argument that those protracted slumps may be behind us, thanks to structural shifts in market supply and demand. Hank Smith, head of investment strategy at Haverford Trust, which oversees more than $15 billion in assets, believes the mechanics of today’s equity market make long, drawn-out bear markets less likely. While pullbacks will continue to happen, he suggests recoveries may now occur far faster than in past decades.
Smith points to two key drivers behind this change: the shrinking supply of publicly listed companies and the rising influence of corporate share repurchases. Together, these forces are creating a market where demand consistently outpaces supply, providing a cushion against extended downturns.
A generation ago, more than 7,000 companies traded publicly in the United States. Today, that number is below 4,000. Adjusted for population, the decline looks even starker: in 1996 there were about 30 public companies for every million Americans, versus only 13 today. This contraction in available investment opportunities has created a scarcity effect.
Layered on top of this is the explosive growth in corporate buybacks. Companies continue to retire their shares at record levels, directly reducing the pool of equities available to investors. In the first quarter of 2025 alone, firms repurchased $55.3 billion of stock. Compare that to $12.8 billion in the first quarter of 2019, or just $7.9 billion in 2000. The steady reduction in shares outstanding amplifies demand pressure, creating an environment where equity supply shrinks even as investor dollars keep flowing into the market.
Meanwhile, there is no shortage of capital ready to chase equities. Money market funds currently hold an estimated $7 trillion. At some point, a portion of that cash will rotate into risk assets, providing fuel for rallies whenever valuations reset. “It really is the result of supply and demand,” Smith argues. “I don’t think it’s much more complicated than that.”
The combination of reduced equity supply and robust investor demand has already shown its influence in recent market cycles. Smith points to the 2020 pandemic crash, when the S&P 500 fell 35% in weeks, and the 2022 drawdown of roughly 25%. Historically, such corrections might have taken years to claw back. Yet in both cases, the index regained all-time highs in less than 12 months. Extraordinary fiscal and monetary support drove part of the 2020 rebound, and the AI-fueled rally powered gains in late 2022, but Smith sees the broader dynamic of supply and demand as a durable factor.
Other market leaders agree. Rick Rieder, BlackRock’s chief investment officer for global fixed income, recently described the current backdrop as “the best investing environment ever,” citing the extraordinary imbalance between supply and demand in equities. “Technicals in equities are crazy,” Rieder told CNBC. “The demand versus supply is pretty extraordinary.”
Alex Morris, CIO at F/M Investments, made a similar case. While acknowledging risks ranging from trade tensions to elevated valuations, Morris believes investor appetite for equities will overwhelm those concerns. “There’s a lot of dollars floating around and they need to go somewhere,” he said. “They’re going to the equity market.”
For advisors, these perspectives carry important implications for client conversations. Fear of a repeat of 2008 or 2000 often shapes investor behavior, leading to over-cautious positioning or panic selling during corrections. Yet if markets are structurally positioned for faster recoveries, the narrative around bear markets may need to be reframed.
That doesn’t mean downturns will disappear. Sharp drawdowns remain part of the equity experience, and advisors should continue to prepare clients for volatility. But the expectation of multi-year recovery periods may no longer be realistic. Instead, investors may see more frequent, shorter-lived pullbacks followed by rapid rebounds. This changes the calculus around asset allocation, cash positioning, and staying invested through turbulence.
Smith’s view also suggests that timing the market has become even more difficult—and potentially more damaging. If recoveries unfold swiftly, clients who move to cash at the first sign of trouble may miss the strongest part of the rebound. Advisors emphasizing long-term discipline can use this structural argument to reinforce the importance of remaining invested through cycles.
At the same time, the decline in the number of public companies raises other strategic considerations. With fewer listed firms, the investable universe has narrowed. This makes stock selection more concentrated and may increase volatility when flows concentrate in fewer names. For advisors, diversification across asset classes and strategies becomes even more critical, as broad equity exposure may no longer provide the same level of balance it once did.
Buybacks also introduce complexity. While they reduce supply, they can mask underlying business challenges if companies repurchase shares primarily to boost per-share metrics rather than reinvest in growth. Advisors must scrutinize the quality of buybacks and distinguish between firms returning excess capital to shareholders and those using repurchases as financial engineering.
For income-focused clients, the rise of buybacks has also shifted the conversation. Where dividends once played a larger role in shareholder returns, buybacks increasingly drive total yield. Advisors may need to explain how this impacts long-term return expectations, cash flows, and portfolio construction.
The abundance of cash on the sidelines is another dynamic to watch. With trillions parked in money market funds, short-term yields have been attractive, but history suggests much of this liquidity eventually seeks higher returns. Advisors may want to discuss with clients how this wave of capital could support equity markets, particularly after pullbacks, reinforcing the case for maintaining equity exposure.
Of course, the structural argument does not eliminate risks. Macroeconomic shocks, policy missteps, or systemic crises could still produce prolonged pain. The difference is that today’s supply-demand backdrop makes extended stagnation less likely absent an extreme event. In practice, this should give advisors greater confidence in guiding clients through corrections without abandoning long-term plans.
For high-net-worth individuals, family offices, and institutional clients, the takeaway is clear: bear markets may feel just as sharp in the moment, but their duration could be far shorter than in previous eras. That makes resilience, discipline, and opportunistic positioning essential traits in portfolio strategy.
Smith’s conclusion captures the shift well: “This isn’t like bear markets a generation or two ago that sometimes took years to get back to the high-water mark. These bear markets are followed by very, very swift, powerful bull moves.”
For advisors, reframing the conversation around bear markets—from fear of prolonged stagnation to anticipation of faster recoveries—could be one of the most powerful ways to help clients stay the course. By aligning expectations with today’s market structure, advisors can strengthen trust, encourage long-term discipline, and better position portfolios for the cycles ahead.
