Market Falls Happen Every Year
Over the past 75 years, the S&P 500 index has experienced a market drawdown every single year (see image below). A drawdown means the market has fallen from its peak during that year.
Sometimes, these declines are small, around 2% or 5%. Other times, they can be steep, such as a 48% drop. Regardless of the size, every year, without exception, the market has faced a decline. This is a reality that investors must accept as part of market behavior.
A Fall Does Not Mean Failure
What surprises many investors is that even after a significant drop, the year often ends with gains. For instance, in 1970, the market fell by 25% at one point but still ended the year in positive territory (see the image above). In 1987, there was a sharp 33% drop; however, the year concluded positively. Even in 2020, when COVID-19 caused the markets to plummet by 34%, the S&P 500 closed the year 18% higher than it started. This indicates that while drawdowns are common, they don’t always lead to a negative year-end result.
🌟 Searching for perfect balance in investing?
Mi AllCap GOLD is here to solve the big questions:
🔶 Where should you invest in equities?
🔶 How to stay calm in volatile times?
✅ 25% each in Large, Mid, Small Caps + Gold
✅ Strongest stocks picked in each segment
✅ Gold as your hedge when markets tumble
✅ Monthly rebalanced – rotational, momentum strategy
Don’t just diversify — balance wisely.
Staying in the Market Pays Off
History shows that market declines are not a reason to panic. Instead, they are a natural part of market behavior. Falls occur, but so do recoveries. If investors sell during a dip out of fear, they may miss out on the subsequent rebound. Historically, there have been very few instances where markets have fallen for two consecutive years. The periods of 1973–74 and 2001–02 are rare exceptions. Most of the time, even after a bad year, recovery follows in the next year.
Building Systems to Handle Market Falls
While market drops are inevitable, savvy investors prepare for them. This involves having clear systems and rules in place for managing portfolios during market downturns. Strategies might include rebalancing, following pre-established investment plans, or simply staying invested without making emotional decisions. The key is not to fear the fall but to learn how to navigate through it with a steady and structured approach.
Think Long-Term, Not Short-Term
The main takeaway from all this data is straightforward: focus on the long game. Don’t get rattled by market dips, as they are simply part of the journey. It’s completely normal for markets to decline by 10%, 20%, or even 30%. What truly matters is holding on long enough to experience the growth that typically follows.
Do you panic when markets fall, or do you remain calm and focused? Share your thoughts in the comments below. If you found this blog helpful, feel free to SHARE it with your friends!
