Market Downturns

Collectively, since 1871, the time it takes for the market to recover (top to trough to top again) is a mere 7.9 months. Learn the history of market downturns and recoveries.

Wayne Thorpe, the senior financial analyst at The American Association of Individual Investors Journal (a.k.a. AAII Journal) has recently shared the following statistics with its members:

Since 1871, market downturns have recovered as follows:

  • 33% of market downturns recover within a month
  • 50% of market downturns recover within two months
  • 80% of market downturns recover within one year
  • 95% of the time those big "once or twice in a lifetime drops" return to even in three to four years

Collectively, since 1871, the time it takes for the market to recover (top to trough to top again) is a mere 7.9 months!

Having a sense of the history of down market recoveries can help you decide how much "safe" money you need to hold in cash in your retirement accounts to cover your expected withdrawals.