Market Declines: A History of Recoveries

Amid growing uncertainty around global tariffs and their potential impact on corporate earnings, last week ranked among the worst on record for the S&P 500, which fell approximately 8%. This decline officially places the index more than 20% below its recent peak, marking its entry into bear market territory.

 

This year marks my 26th year advising clients on long-term investment strategies. Over that time, I’ve seen the S&P 500 grow by more than 500% (not including dividends), while also witnessing four or five major market declines—each triggered by different events. While today’s environment may continue to be challenging in the short term, history has consistently shown that markets recover. The value of America’s top 500 companies may dip further before rebounding, but they have always rebounded.

 

As Mark Twain famously said, “History doesn’t repeat itself, but it often rhymes.”

 

Don’t just take my word for it—or Twain’s. Click below for a historical look at how the S&P 500 has performed 1, 5, and 10 years after previous drops of 20% or more.

When investors are informed and focused on the long term, they’re far more likely to avoid emotional or panic-driven decisions.

As always, please don’t hesitate to reach out if you have any questions or would like to talk through your investment strategy.

 

Click here to check out the pdf with a helpful chart.

 

Warm regards,
Erik Thompson