Market downturns (1928 – current)
| Drawdowns | Number of occurrences | Average number of occurrences per year | Average drawdown (%) | Average drawdown time (months) |
|---|---|---|---|---|
| -5% or more | 329 | 3.4 | -10.8 | 1.2 |
| -10% or more | 103 | 1.1 | -19.4 | 3.3 |
| -15% or more | 47 | 0.5 | -27.8 | 6.0 |
| -20% or more | 27 | 0.3 | -35.2 | 9.5 |
Investing $1,000,000 in the S&P 500 Index
| Time in the market | Past 30 years | Past 20 years | Past 10 years | Past 7 years | Past 5 years |
|---|---|---|---|---|---|
| Remain fully invested | $11,787,132 | $4,665,515 | $2,806,301 | $2,223,856 | $1,853,779 |
| Missing 10 best days | $5,416,137 | $2,142,834 | $1,540,581 | $1,219,963 | $1,031,090 |
| % drop by missing 10 best days | -54% | -54% | -45% | -45% | -44% |
| Missing 50 best days | $900,532 | $412,291 | $530,398 | $428,679 | $372,264 |
| % drop by missing 50 best days | -92% | -91% | -81% | -81% | -80% |
Sources: Bloomberg, Ned Davis Research, and Wells Fargo Investment Institute. Market downturn analysis: data from January 3, 1928, to March 31, 2024. Past 30 years: data from April 1, 1994, to March 31, 2024. Past 20 years: data from April 1, 2004, to March 31, 2024. Past 10 years: data from April 1, 2014, to March 31, 2024. Past 7 years: data from April 1, 2015, to March 31, 2024. Past five years: data from April 1, 2019, to March 31, 2024. For illustrative purposes only. The S&P 500 Index is a market capitalization weighted index composed of 500 stocks generally considered representative of the U.S. stock market. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. A price index is not a total return index and does not include the reinvestment of dividends. Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions.
Note: Corrections are declines of 10% or more. Bear markets are declines of 20% or more.
Key Takeaways
- The majority of market drawdowns have been between 5% and 10% declines. These have tended to recover much quicker than more severe corrections.
- Over long and short time periods, missing the best 10 days reduced the potential investment amount by 50%. Missing the 50 best days resulted in an ending period balance that was below the original investment.