For badly burned stock investors, the second-worst bear market ever came to an abrupt and welcome halt beginning on March 6. Until then, stock indexes had plummeted more than 50% from their peak in October 2007, erasing 12 years of gains and trillions of dollars in investors’ wealth globally. (The only time the stock market had fallen harder was between August 1929 and June 1932, when the S&P 500 Index lost more than 83% of its value.)

The latest bear market was so relentlessly harsh that it sank share prices and market capitalizations to levels that were unprecedented in some cases. For instance, in November 2008, nearly one in 10 stocks traded below the value of their per-share holdings of cash -- a greater proportion than even in 1932, when the market was at its lowest point in history.

But the market suddenly reversed form in March, setting stocks on a sharply upward trajectory. And as the rally accelerated, it was abetted by hedge funds that were compelled to massively cover their short positions -- positions in stocks expected to perform poorly. From the intraday low of March 6 to May 8, in the course of 45 trading days, the S&P 500 Index rose 36.45%. Small stocks produced even more robust total returns. The Russell 2000 Index gained 46.26%, the Russell 2000 Growth Index went up 41.70%, and the Russell 2000 Value Index soared 50.98%.

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