US Equity Returns Following Sharp Downturns
Sudden market downturns can be unsettling.
But historically, US equity returns following sharp downturns have been positive.
• A broad market index tracking data since 1926 in the US shows that stocks have generally delivered strong returns over one-year, three-year, and five-year periods following steep declines.
• Just one year from a decline of 10% or 20%, returns were higher than the long-term average of 9.6%. And the return after a 15% decline was within half a percentage point of the average.
• Looking three and five years later also shows annualized returns averaged higher than the long-term average.
Sticking with your plan helps put you in the best position to capture the recovery.