The Biggest Stock Market Reversal in History

The Biggest Stock Market Reversal in History

Posted On November 30, 2020 11:56 am

By Ben Carlson 

In the depths of the stock market crash in March, the S&P 500 had fallen nearly 34% from all-time highs in about 4 weeks. At that point, the year to date return for the S&P was a loss of more than 30%. As of the close of the market on Wednesday, it’s now up more than 12%.

There are still 6 weeks or so left in the year but as of this moment, the massive swing from huge losses to a gain will likely go down as the biggest stock market reversal in history. I looked back at the intra-year losses for the S&P 500 from 1928 through 2020. Here are those intra-year losses paired with how the stock market finished the year:

Every year there is a peak-to-trough loss, some bigger than others. Over this 93 year period, the average drawdown in a given year has been roughly 17%.

Since 1928, the stock market has seen 5% losses almost every year, 10% losses 3 out of every 5 years, 20% losses 1 out of every 4 years, 30% losses 1 out of every 10 years, and 40% losses 1 out of every 20 years. The majority of the worst losses took place in the 1930s. In fact, there was a double-digit drawdown every single year from 1928-1943 and 11 out of those 16 years experienced losses in excess of 20%.1 So there was a bear market in 70% of all years in that time.

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Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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