Bill Nygren: How We Navigated 2025’s Shortest Bear Market Ever
Wednesday, July 9, 2025 · Johnny Hopkins
In the second quarter of 2025, the U.S. equity market experienced one of the shortest and most volatile bear markets in history. As Bill Nygren of Oakmark reflects in his latest Q2 2025 Market Commentary. “Never waste the opportunity offered by a good crisis.”
The S&P 500’s dramatic swings—from a 4% gain in mid-February to a 20% drop by April 8, followed by a rapid recovery to new highs by June 26—created a unique challenge for investors.
Nygren notes, “It was the shortest bear market ever, troughing on the very day it hit down 20%, and it was also the fastest recovery to a new high.” This unprecedented volatility tested the resilience of investment strategies, and Oakmark’s bottom-up approach proved its worth once again.
Nygren emphasizes the firm’s focus on individual company analysis rather than macroeconomic forecasting. “Our process at Oakmark is ‘bottom-up,’ meaning we spend most of our time analyzing individual companies,” he explains.
This method allowed the team to navigate the crisis with confidence, even as recession fears loomed. When the market panicked after “Liberation Day,” Oakmark saw opportunity. “We’ve found that early in bear markets, stock prices are not usually driven by individual company valuations, but rather on quickly reducing portfolio risk. This reaction creates a good pond for us to fish in,” Nygren says.
The firm’s disciplined approach led to aggressive repositioning, with nearly one-third of the portfolio adjusted over ten weeks. “We were about five times as active as normal,” Nygren recalls, highlighting purchases of Nike and Amazon and sales of Kroger and AIG.
The speed of the market’s recovery caught many by surprise, including Oakmark. “This was unfortunate in a way, because the portfolio changes we made worked so well. In hindsight, had we known the bear market was over, we’d have moved faster,” Nygren admits.
Yet the firm’s agility paid off, with buys outperforming sales significantly. The case of Keurig Dr. Pepper (KDP) illustrates their nimbleness: “We added to our KDP position in January at $31. At the market peak on February 19, KDP closed at $33. But at the market bottom on April 8, with the S&P down 20%, KDP had risen slightly to $34.” By selling high and buying back low, Oakmark demonstrated the value of active management in turbulent times.
Tax efficiency also played a role in their strategy. “Part of our elevated trading was from tax loss harvesting, a tool that can benefit all our shareholders by reducing capital gains distributions,” Nygren explains. This proactive approach ensured minimal tax burdens for investors, reinforcing Oakmark’s commitment to shareholder value.
Looking ahead, Nygren reiterates the importance of sticking to a plan. “Though we aren’t market timers at Oakmark, we are fans of periodic portfolio rebalancing,” he says. The firm’s philosophy remains unchanged: focus on long-term value, avoid emotional decisions, and capitalize on volatility.
As Nygren concludes, “An investor who invested $10,000 in the S&P 500 in 1950, would have $40 million today. And if they switched that to the Oakmark Fund when it started in 1991, they would have $76 million. How much attention do you want to devote to improving on those returns by trying to time the market?”
You can read the entire commentary here: