Stocks Historical Returns

The S&P 500 has averaged 10 percent return a year. Through bear markets and bull markets it has averaged this return through all its years. The market has had some extremely high returns and also some very large drawdowns, (depending on when you entered the market of course.) One should be prepared to also see these ups and downs once invested in the market. Remember to stay in and even better, increase your overall shares. Market crashes are opportunities to purchase shares at a lower price. Here listed, are some of the worst drawdowns the market has witnessed.

  • The Great Depression (1929-1932):

This period witnessed the most severe drawdown in S&P 500 history, with an 86% decline over 34 months. Seeing a decline like this could make even the most disciplined investor sweat..

  • Black Monday (October 19, 1987):

On this day, the S&P500 dropped 20%. A significant drop

  • The Dot-Com Bust (2000-2013):

This large draw down was caused by a tech craze, and resulted in a 49% loss in the market's value.

  • Covid 19 Crash (2020)

The S&P500 had crashed from 3.38k on Feb.19 2020, to a low price of roughly 2.24k on march 23, 2020.

Listed below is a chart showing some of the worst declines for the S&P500

With that being said, we can be prepared to see very bad market crashes throughout our investing career. Recognize that this is perfectly normal and to just stay in the market. If you are still working a job, career, or running a business, then you can take this opportunity to purchase more shares at a lower price. If you are living off of your investment portfolio, and you have a 25 percent bond allocation (VBTLX, a total bond market index fund) then a market crash would be a good time to sell your bonds and purchase stocks (VTSAX, a total stock market index fund) to keep your 75/25 percent allocation in tact. Bonds in your portfolio would act as an income if you are no longer receiving a normal income from a job or business. The bonds will retain price and are not volatile, while paying a bond yield, 3-4 percent. Stock crashes will not be so harsh having this allocation. 100% stocks would offer higher returns, but the crashes may cause more stress on your sanity. Every investor has his or her own stress threshold but for me, a 75/25 allocation will do just fine.

Now that we know that we will see bad times.. Lets remember that we will also see very good times in the stock market with substantial returns! Not all is bad in the market all the time.. Take for example the last 5 years, currently VTSAX is sitting at $127 dollars a share at the time of writing. Up over 100% from the covid pandemic low price around March of 2020. Recently Tariffs from April 2 “Liberation day” created a volatile stock market, causing the price to go from a peak of $147 down to $127 a share or -13% Personally, I recommend not watching the news as it is filled with too much noise and nonsense.. Just stay in the market and depending on your timeframe horizon, you will do well.

Ok, now lets zoom out a bit…

From June of 2011 to Feb. of 2025s peak, had you been in the market, your stock portfolio would have grown 344%. Now that is awesome. 344% over 13.6 years would have yielded an average return of 24.5% a year. 24.5% a year return would make any investor look like a genius, but you can see these returns without having to look at the market and even better, without spending hours looking at charts. I’ll say it once and I’ll say it 100 times. “Time in the market is more important than timing the market” (and less stressful). You guys have heard the phrase, don’t just stand there! Do something! Well me and others, (Jack Bogle) have another saying, a better saying.. Just stand there! Don’t do anything! The latter of the two, funny enough, will actually make you wealthier.

Refer below to times the market has seen very high returns

With all this being said, rememeber that stock market returns can fluctuate up and down, but ultimately an average of 10 percent return a year will be achived over the long term. During stock market crashes, pandemics, world wars, political clashes etc. etc. Stay in the market long term and do nothing!!!!