In a recent article for MarketWatch, columnist Mark Hulbert explains that the severity of the next bear market has become a pressing question of late, “since Wall Street has shifted from whether a U.S. recession will occur in the next 12-18 months to when.”

To determine whether the severity of the next bear market could be predicted, Hulbert analyzed all 36 bear markets since 1900 (data from Ned Davis Research). His findings are charted below:

Hulbert summarizes his findings as follows:

• There is no correlation between bull-market length and subsequent bear-market severity.
• To analyze the effect on price-earnings ratios, he divided the 36 bear markets into two equal groups: the first held those for which the P/E ratio was lowest when the bear market began, with the other containing those with the highest ratios. His study found that the Dow’s average loss in the first group of bear markets was 27.8%, versus an average loss of 34.5% for the second group.
• The cyclically adjusted price-earnings ratio (CAPE), Hulbert writes, “did somewhat better still than the traditional P/E ratio,” which could be good or bad news, depending on the investor’s perspective. Given the current high level of the CAPE, he notes, “you might be relieved that this does not guarantee—in a statistical sense—that the next bear market will be especially severe.” But on the other hand, he argues, “there’s a historical tendency for bear markets to be more severe when they begin from higher CAPE levels.”

Hulbert concludes by pointing out that a “simple econometric model whose inputs are past bear markets and CAPE values predicts that, if a bear market were to begin from current levels, the Dow would tumble 35.4%. Though that’s less severe than the 2007-2009 bear market, it still would sink the Dow below 17,000. Bulls, take note.”