Until the tenuous turnaround at the end of October 2002, the bear market that had hammered investors during the previous two years was, by most typical measures, the worst since the Great Depression. The S&P 500 remains down by more than a third over the past three years, and many investors are still wary.

But a closer look at the index reveals some surprises. Most investors know that the biggest drops occurred in the information technology and telecom sectors. Companies valued at more than $50 billion suffered disproportionately as well. What most people don’t know, however, is that the postbubble damage was confined largely to these categories: while the S&P was plunging, the share prices of almost two-thirds of the companies in it either rose in value or fell by less than 10 percent on an annualized basis. There is no denying that investors were hurt, but it is a strange bear market when more than 40 percent of the stocks in the index increase in value. What is more, share prices in the information technology and telecom sectors now seem to be back in line with the rest of the market, suggesting that the worst of the decline...