Understanding Long-Term Market Data
A large set of market data from 1928 to 2025 shows how the US stock market moves within a year. This data covers almost 97 years of history. It looks at how much the S&P 500, one of the most important stock market indexes in the world, falls during different years. The goal of this data is simple. It helps us understand that market ups and downs are normal and part of long-term investing.
Small Falls Are Very Common
Market drops of 5% to 10% can happen in almost any year. These kinds of falls should not be a reason to panic. If the market is down by 10%, it does not mean something very bad is happening. It is just a normal part of how markets move. Investors should expect such small drops and learn to stay calm during these times.
Medium Falls Happen Every Few Years
A fall of around 20% has happened in about 26% of all years over the last 100 years. On average, this means a 20% drop comes once every four to five years. A 25% fall also shows up about once every five years. These numbers tell us that such drops are not rare events. They are a regular feature of stock market history.
Big Falls Are Rare but Important
Very large falls, like 40%, have happened about once every 16 years. Even more extreme falls of around 50% have happened only two times in almost a century. These big drops feel scary when they happen, but history shows that they do not last forever.
What Usually Follows Big Drops
After very deep market falls, the years that follow are often very strong. Many times, a great decade of growth comes after a major crash. This means big drops can also create good long-term opportunities for patient investors.
Set Realistic Expectations
When people understand how often these falls happen, their expectations become more realistic. This makes it easier to stay invested during tough times. Unrealistic hopes about smooth and steady growth cause many people to exit the market too early. Knowing market history helps investors stay calm, stay invested, and handle ups and downs with confidence.
