History Shows That Stock Gains Can Add Up After Big Declines
Posted on 12th July 2021
Sudden market downturns can be unsettling...
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...But historically, US equity returns following sharp downturns have, on average, been positive.
• A broad market index tracking data since 1926 in the US shows that stocks have tended to deliver positive returns over one-year, three-year, and five-year periods following steep declines.
• Cumulative returns show this to striking effect. Five years after market declines of 10%, 20%, and 30%,
the compounded returns all top 50%.
• Viewed in annualised terms across the longest, five-year period, returns after 10%, 20%, and 30% declines have been close to the historical annualised average over the entire period of 9.7%.
Sticking with your plan helps put you in the best position to capture the recovery.
Past performance is no guarantee of future results. Short-term performance results should be considered in connection with longer-term performance results.
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