How long did it take to recover from 2008 stock market crash?
Starting with the “tech wreck” in 2000, inflation totaled 35.7%, prolonging the real recovery in purchasing power an additional seven years and nine months. The bounce-back from the 2008 crash took five and a half years, but an additional half year to regain your purchasing power.
It typically takes five months to reach the “bottom” of a correction. However, once the market starts to turn, it can recover quickly. The average recovery time for a correction is just four months!
Lasting from December 2007 to June 2009, this economic downturn was the longest since World War II. The Great Recession began in December 2007 and ended in June 2009, which makes it the longest recession since World War II. Beyond its duration, the Great Recession was notably severe in several respects.
Compared with the Stock Market Crash of 1929, which sparked the decade-long Great Depression, the markets recovered relatively quickly after the stock market crash of 1987, regaining their pre-crash heights within two years.
The worst 10 year annual return was a loss of almost 5% per year ending in the summer of 1939. That was bad enough for a 10 year total return of -40%.
Do you lose all the money if the stock market crashes? No, a stock market crash only indicates a fall in prices where a majority of investors face losses but do not completely lose all the money. The money is lost only when the positions are sold during or after the crash.
There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.
Home prices fully recovered by late 2012. If someone bought a house at the very peak of the recession in 2007 and held the property for 5 years, they made money in appreciation after 2012. It took 3.5 years for the recovery to begin after the recession began.
For workers and households, the picture was less rosy. Unemployment was at 5% at the end of 2007, reached a high of 10% in October 2009, and did not recover to 5% until 2015, nearly eight years after the beginning of the recession. Real median household income did not recover to pre-recession levels until 2016.
Economists predict another year of slow growth around the world in 2024. While the risk of a global recession is lower in the year ahead, two G7 economies dipped into recession at the end of 2023.
What is the longest recovery for the stock market?
As shown in the table below, the recovery period for U.S. stocks has been as long as 15 years: In the wake of the 1929 Crash, the IA SBBI US Large Stock Index didn't fully recover until late 1944.
The Dutch Tulip Bulb Market Bubble, also known as Tulipmania took place in 1637. Oct. 19, 1987, also known as Black Monday, marked the largest one-day stock market decline in history. The 2020 Coronavirus Stock Market Crash lasted several months.
The worst stock market crash in history started in 1929 and was one of the catalysts of the Great Depression. The crash abruptly ended a period known as the Roaring Twenties, during which the economy expanded significantly and the stock market boomed.
History illustrates some of the problems in forecasting the short-term movements of stock prices. Based on what happened in 1994, prognosticators then were forecasting a weak year for stocks in 1995. But stock prices soared in 1995--arguably, the best year in history.
Looking at how frequently the stock market loses purchasing power, we see losses about 1/3 of single years, 1/4 for rolling 5-year periods, 1/8 for 10-year periods, and not a single losing 20-year period.
The DJIA closed at a record 18,312 on May 19, 2015, before slowly falling to a low of 17,504 and then partially recovering to its secondary closing peak of 18,102 on July 16. The stock market slowly slid thereafter, reaching a low of 17,403. The NASDAQ Composite peaked on July 17, 2015, at 5,219.
Your investment is put into various asset options, including stocks. The value of those stocks is directly tied to the stock market's performance. This means that when the stock market is up, so is your investment, and vice versa. The odds are the value of your retirement savings may decline if the market crashes.
Staggering data reveals 90% of retail investors underperform the broader market. Lack of patience and undisciplined trading behaviors cause most losses. Insufficient market knowledge and overconfidence lead to costly mistakes. Tips from famous investors on how to achieve long-term success.
Where to put money during a recession. Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.
If you're 70, you should keep 30% of your portfolio in stocks. However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age.
How much should a 60 year old have in stocks?
For years, a commonly cited rule of thumb has helped simplify asset allocation. According to this principle, individuals should hold a percentage of stocks equal to 100 minus their age. So, for a typical 60-year-old, 40% of the portfolio should be equities.
The Rule of 120 (previously known as the Rule of 100) says that subtracting your age from 120 will give you an idea of the weight percentage for equities in your portfolio.
Cash: Offers liquidity, allowing you to cover expenses or seize investment opportunities. Property: Can provide rental income and potential long-term appreciation, but selling might be difficult during an economic downturn.
The Crash. The collapse of the housing market during the Great Recession displaced close to 10 million Americans as rising unemployment led to mass foreclosures. 1 In 2008 alone, 3.1 million Americans filed for foreclosure, which at the time was one in every 54 homes, according to CNN Money.
“We will not have a repeat of the 2008–2012 housing market crash,” Yun said in a statement last fall. “There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.”
References
- https://www.moneylion.com/learn/can-you-lose-money-in-stocks/
- https://www.nerdwallet.com/article/investing/average-stock-market-return
- https://www.investopedia.com/terms/b/blackmonday.asp
- https://finance.yahoo.com/news/stocks-bubble-keep-inflating-until-233122429.html
- https://www.tradersmastermind.com/what-is-the-11am-rule/
- https://www.litefinance.org/blog/analysts-opinions/dow-jones-forecast/
- https://www.hartfordfunds.com/practice-management/client-conversations/managing-volatility/bear-markets.html
- https://medium.com/atlasa/recession-strategy-what-can-2008s-data-teach-us-about-when-to-buy-and-when-to-sell-3515b838e598
- https://www.linkedin.com/pulse/what-does-recession-mean-housing-market-bestrealestatemarket-jsskc
- https://www.npr.org/2023/09/29/1202582077/why-september-on-average-is-the-worst-month-for-the-stock-market
- https://smartasset.com/investing/5-things-to-invest-in-when-a-recession-hits
- https://www.investopedia.com/terms/g/great-recession.asp
- https://www.bankeronwheels.com/9-reasons-why-active-investing-is-difficult/
- https://www.investopedia.com/articles/investing/062714/100-minus-your-age-outdated.asp
- https://www.tipranks.com/stocks/amzn/forecast
- https://www.thestreet.com/dictionary/stock-market-crash-1987
- https://www.edwardjones.ca/ca-en/market-news-insights/guidance-perspectives/investing-through-recessions
- https://www.cashmatters.org/blog/pro-cash-potential-in-the-us-for-2024
- https://www.federalreservehistory.org/essays/recession-of-1981-82
- https://www.linkedin.com/pulse/benefits-bear-market-shaun-t-scott-auhie
- https://www.investopedia.com/articles/investing/030716/one-thing-never-do-when-stock-market-goes-down.asp
- https://www.investopedia.com/terms/b/bearmarket.asp
- https://www.forbes.com/sites/johnjennings/2023/10/19/black-monday-the-improbable-crash-its-causes-and-timeless-lessons-for-investors/
- https://www.morningstar.com/news/marketwatch/20240325111/wall-street-revamps-2024-sp-500-targets-after-record-setting-stock-market-rally
- https://finimize.com/content/what-will-sp-500-return-over-next-10-years
- https://www.forbes.com/advisor/investing/stock-market-forecast-2024/
- https://www.fool.com/investing/stock-market/basics/crashes/
- https://www.morningstar.com/portfolios/how-long-will-it-take-market-recover
- https://www.linkedin.com/pulse/what-11am-rule-trading-exness-in-india-cjfjc
- https://www.bankrate.com/investing/biggest-stock-market-crashes-in-us-history/
- https://finance.yahoo.com/news/10-return-investment-roi-141300511.html
- https://www.fool.com/investing/how-to-invest/stocks/when-to-sell-stocks/
- https://www.tker.co/p/average-equity-holding-period
- https://www.tradersmagazine.com/am/the-stock-market-can-be-less-risky-than-cash/
- https://www.linkedin.com/pulse/what-90-rule-forex-broker-forex-global-czp0c
- https://www.marshmma.com/us/insights/details/should-i-reduce-my-401k-contribution-when-the-market-is-down.html
- https://www.fool.com/the-ascent/banks/where-put-money-recession/
- https://www.nasdaq.com/articles/history-says-the-nasdaq-could-soar-21-in-2024.-heres-the-growth-stock-to-buy-right-now.
- https://www.bankrate.com/investing/when-to-sell-stock/
- https://money.cnn.com/retirement/guide/investing_basics.moneymag/index7.htm
- https://money.usnews.com/investing/articles/best-growth-stocks-to-buy
- https://awealthofcommonsense.com/2023/01/the-best-worst-decades-to-be-a-saver-investor/
- https://www.nasdaq.com/articles/4-predictions-for-the-stock-market-in-2024-and-which-stocks-will-soar-the-most-if-theyre
- https://www.globalatlantic.com/professionals/thriving-practice/market-insights/rule-120
- https://www.hcplive.com/view/the-dow-will-probably-hit-50000-by-2027
- https://finance.yahoo.com/losers/
- https://www.investopedia.com/financial-edge/0711/how-to-double-your-money-every-6-years.aspx
- https://medium.com/@marketinvestopedia33/what-is-the-3-5-7-rule-in-trading-a33fd61fc617
- https://www.federalreservehistory.org/essays/great-recession-of-200709
- https://www.history.com/news/great-depression-people-who-made-money
- https://finance.yahoo.com/news/stock-markets-safety-net-bigger-000004117.html
- https://www.investopedia.com/articles/investing/052216/4-benefits-holding-stocks-long-term.asp
- https://www.fidelity.ca/en/insights/articles/pull-money-out-stock-market/
- https://www.investopedia.com/articles/basics/09/cash-is-king.asp
- https://www.fidelity.ca/en/insights/articles/pull-money-or-keep-investing/
- https://www.screener.in/screens/92669/best-long-term-stocks/
- https://www.nasdaq.com/articles/this-stock-market-indicator-has-been-100-accurate-since-1957.-it-signals-a-big-move-in-the
- https://goldsilver.com/blog/heres-how-long-it-really-takes-to-recover-from-stock-market-crashes/
- https://www.cnbc.com/2024/02/16/sp-500-could-hit-6500-by-end-2025-says-capital-economics.html
- https://www.tipranks.com/stocks/cost/forecast
- https://www.covenantwealthadvisors.com/post/understanding-stock-market-corrections-and-crashes
- https://medium.com/@Levente22/shocking-but-true-90-of-people-lose-money-in-stocks-9da95870cbe8
- https://www.fool.com/investing/how-to-invest/stocks/good-time-to-buy-stocks/
- https://ethis.co/blog/top-4-money-mistakes-to-avoid-in-a-bear-market/
- https://www.morningstar.com/portfolios/experts-forecast-stock-bond-returns-2024-edition
- https://money.usnews.com/investing/articles/best-long-term-stocks-to-buy
- https://en.wikipedia.org/wiki/Black_Monday_(1987)
- https://www.investopedia.com/articles/basics/03/060603.asp
- https://www.investopedia.com/timeline-of-stock-market-crashes-5217820
- https://www.bankrate.com/investing/low-risk-investments/
- https://www.fool.com/investing/2024/04/14/is-right-now-a-good-time-to-invest-in-the-stock-ma/
- https://www.investopedia.com/should-you-save-your-money-or-invest-it-depends-4692975
- https://www.investopedia.com/ask/answers/06/investduringbearmarket.asp
- https://awealthofcommonsense.com/2023/02/deconstructing-10-20-30-year-stock-market-returns/
- https://www.fidelity.com/learning-center/trading-investing/new-bull-market-2024
- https://www.fool.com/investing/stock-market/types-of-stocks/safe-stocks/
- https://www.investopedia.com/ask/answers/how-does-one-make-money-short-selling/
- https://www.statmuse.com/money/ask/best-performing-stocks-1987
- https://www.bankrate.com/retirement/how-to-protect-401k-from-market-crash/
- https://www.livemint.com/Money/Oww1BVK1roWvXRUCd0VjIJ/25-years-to-bounce-back-from-the-1929-crash-Try-fouranda.html
- https://www.5paisa.com/blog/best-multibagger-penny-stocks-for-2024
- https://www.kompas.id/baca/english/2024/03/06/en-warga-super-kaya-dunia-kurangi-kepemilikan-saham-kecuali-asia
- https://www.cnn.com/2024/03/24/economy/stocks-week-ahead-fed-recession-coming-years/index.html
- https://www.nirmalbang.com/knowledge-center/things-to-do-when-stock-market-crashes.html
- https://www.kiplinger.com/investing/analysts-top-sandp-500-stocks-to-buy-now
- https://www.aei.org/pethokoukis/obama-didnt-end-the-great-recession-that-bush-didnt-cause/
- https://www.investopedia.com/ask/answers/062515/how-was-american-dream-impacted-housing-market-collapse-2008.asp
- https://www.forbes.com/advisor/investing/stock-market-outlook-and-forecast/
- https://www.weforum.org/agenda/2024/02/what-is-a-recession-economy-definition-explainer/
- https://www.linkedin.com/pulse/how-long-might-bear-market-recovery-take-tppfg
- https://www.investopedia.com/articles/stocks/07/when_to_sell.asp
- https://www.schwab.com/learn/story/how-to-recover-from-big-trading-loss
- https://money.com/bear-market-ends-bull-market-begins/
- https://www.uky.edu/~deberti/stock.htm
- https://www.afrugaldoctor.com/home/market-zero
- https://kwbwealth.com/blogs/what-could-cause-the-dow-to-reach-50000
- https://finance.yahoo.com/news/why-bull-market-2024-just-180300707.html
- https://www.thestreet.com/dictionary/bear-market
- https://www.stash.com/learn/how-long-do-bear-markets-last/
- https://www.schwab.com/learn/story/how-to-invest-bear-market
- https://www.experian.com/blogs/ask-experian/where-to-put-savings-in-recession/
- https://www.usatoday.com/money/blueprint/retirement/protect-your-401k-during-recession/
- https://investorplace.com/2024/03/the-2025-double-3-stocks-poised-to-deliver-100-gains-in-just-12-months/
- https://finance.yahoo.com/news/nearly-half-americans-don-t-130024076.html
- https://apnews.com/buyline-personal-finance/article/what-to-do-when-the-stock-market-crashes
- https://www.sofi.com/learn/content/can-you-lose-money-in-an-ira/
- https://www.angelone.in/knowledge-center/share-market/how-long-should-you-hold-a-stock
- https://www.bankrate.com/real-estate/is-the-housing-market-about-to-crash/
- https://www.investopedia.com/articles/retirement/09/401k-bear-market.asp
- https://www.fool.com/terms/b/bear-market/
- https://www.bankrate.com/investing/best-long-term-investments/
- https://www.barrons.com/articles/how-to-invest-bear-stock-market-51658518245
- https://en.wikipedia.org/wiki/2015%E2%80%932016_stock_market_selloff
- https://www.britannica.com/story/5-of-the-worlds-most-devastating-financial-crises
- https://money.com/hold-cash-bear-market/
- https://www.nerdwallet.com/article/investing/how-to-invest-during-a-bear-market