Before you invest
When markets fall
Every long-term investor lives through big falls. They are not a sign that something has broken — they are the normal cost of the returns that make investing worthwhile. Knowing roughly what they have looked like is what makes them survivable.
Historical figures, approximate, for education only. Past falls and past recoveries tell you nothing certain about future ones.
The five big falls since 1985
S&P 500, peak to trough, price basis. Rounded — the scale and the waiting are the point, not the decimals.
Black Monday 1987
−34%
Most of the damage happened in days. Regaining the old high still took until July 1989.
Back to its previous high: about 2 years
Dot-com crash 2000–2002
−49%
Technology valuations unwound slowly. The longest wait on this list — an investor who bought at the peak was down for most of a decade.
Back to its previous high: about 7 years
Global financial crisis 2007–2009
−57%
The deepest fall here. The index did not close above its October 2007 high again until March 2013.
Back to its previous high: about 5 years
COVID crash 2020
−34%
The fastest fall on record, and one of the fastest recoveries. Anyone who sold in March 2020 missed it.
Back to its previous high: about 6 months
Inflation bear market 2022
−25%
A slower grind driven by inflation and rising interest rates, rather than a single shock.
Back to its previous high: about 2 years
What this actually means for you
A fall of 30–50% is normal, not a malfunction
It has happened repeatedly, roughly once a decade, and it will happen again at some point after you start. A fund that fell in a falling market is doing exactly what it is built to do: track the market.
Recovery can take years, so your time horizon is everything
Six months after the 2020 fall; roughly seven years after the 2000 peak. This is why money you might need soon does not belong in the market — not because falls are unlikely, but because you cannot choose when you are forced to sell.
Selling during a fall is what turns it into a real loss
While you hold, a fall is on paper. Selling makes it permanent, and means you are not there for a recovery whenever it comes. This is a decision made under stress, which is exactly why it is worth making in advance instead.
What to do before it happens
Keep an emergency fund outside your investments
3–6 months of expenses in easy-access savings. This is what stops a bad month forcing you to sell at a bad price.
Only invest money you can leave alone for years
The falls above are the reason. Recovery has taken anywhere from months to seven years, and nobody knows in advance which one they are getting.
Write down why you bought, while things are calm
One or two sentences. During a fall, your own reasoning in your own words is worth more than any commentary you will read.
Decide now what you will do when it drops 30%
Deciding in advance — keep investing, or simply do nothing — means you are following a plan rather than reacting to a headline.
Check your balance less often
Daily checking makes normal movement feel like an emergency. Monthly is plenty for a plan measured in years.
The honest limits of this page
Recovery is not a rule. Every fall listed here was followed by a recovery, but that is history, not a promise. A future fall could be deeper, take longer, or arrive at the worst possible moment for you.
These are S&P 500 price figures. Your own fund will differ. A globally diversified fund has usually moved a little less sharply, and figures that exclude dividends understate what an investor reinvesting them actually experienced.
Currency moves on top of all this. If you invest in euro into a fund tracking US companies, the EUR/USD rate changes your result too — in both directions, and independently of whether the index rose or fell.
This page is general education, not financial advice, and not a suggestion about what you should hold or when.
Now the calmer question
The calculator shows the worst 10-year stretch alongside the long-run average, so you can see both sides of the same plan.