Recently, US markets saw one of the biggest four-day drops in history. From April 4th to April 8th, 2025, the S&P 500 fell 12% in just four sessions. This fall is now ranked as the 12th worst four-day decline in the last 75 years. Such sharp drops have only happened 14 times before. The biggest one was in 1987 during the Black Monday crash when the market lost 28% in four days.
How the Market Bounced Back Before
What’s most interesting is what happened after these crashes. Every single time the market saw a sharp four-day fall, it gave at least double-digit returns in the next one year. The lowest one-year return after such crashes was around 10%, and in some cases, like in 2020, the market bounced back by as much as 78% within just a year. This shows that even when things look really bad, markets can recover quickly.
Three-Year Returns Are Even Better
If we look a bit further, the three-year returns after these big drops are even more encouraging. The worst three-year return from these points was around 23%, and in most cases, the market went up by 60% to 85% in the following three years. That’s a strong signal for long-term investors to stay calm and stay invested.
The Five-Year View: Very Rewarding
Now comes the real reward—five-year performance. From almost every one of these 14 massive declines, the five-year returns were stunning. Most of them were above 100%, some even going up to 174%. The only exception was in 1998, which was just before the dot-com bubble. But even then, investors didn’t lose money; they just made smaller gains.
Crisis Today, Opportunity Tomorrow
So what can we learn from this? Every crisis looks scary when it’s happening. But if history is any guide, these crises also create great opportunities for the patient investor. Markets work in cycles—from fear to greed, from under-owned to over-owned, and then back again. Knowing this gives us the strength to face tough times with a cool mind.
In The Momentum Podcast this week
From F&O failure to momentum master—Rachit’s journey is a must-watch!
Learn how he escaped a 30% crash with just 4% drawdown and built a stress-free investing strategy.
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