📉 150 Years of Market Crashes: What History Teaches Us About Staying Invested
With market volatility spiking this week, we wanted to take a moment to provide some historic perspective pertaining to stock market declines. A recent Morningstar study looked back at over 150 years of market crashes and though they all varied in length of time and magnitude, one thing has remained true: the market has always recovered and went on to reach new highs.
With the new tariffs and trade tensions making headlines, it’s natural to feel uncertain and question your investment strategy. A well diversified portfolio that is built alongside your financial plan isn’t immune from market volatility, but history shows sticking to your plan when market corrections occur has worked out positively for investors.
Market Crashes and Recoveries
Morningstar identified 19 bear markets (20%+ declines) since 1871. These included:
The 1929 crash and Great Depression: 79% decline, the largest in U.S. history.
The 2008 Great Recession: 57% decline, with a five-year recovery.
The COVID-19 crash: 34% drop, but the fastest recovery ever—just 4 months.
The 2022 inflation-driven decline: 25% drop, with recovery taking 18 months.
Despite their severity, each of these events ended with the market hitting new highs.
$100 in 1870 = $3,071,100 today
Had you invested $100 at the beginning of the new millennium would be worth more than $300 as of Feb 2025. 3x return on your investment which includes the Lost Decade in the 2000’s (Dot-Com Bust and Global Financial Crisis) where stocks were flat. Had your great-great grandfather invested $100 back in 1870, it would be worth $3,071,100 today.
These returns include every crash, every recession, every war, and every panic. The key to that kind of growth? Staying invested. “Time in the market, not timing the market.”
Plan for Volatility
Integrating these historical lessons directly into your financial plan can help you stay the course.
Diversified portfolios to reduce concentrated risk.
Strategic cash reserves to avoid selling assets at a loss.
Time horizon-based investing to align short-term needs and long-term growth..
🧭 The Takeaway
The market has faced war, depression, inflation, pandemics—and recovered every time. While the timing of recoveries is unpredictable, the pattern has been consistent historically.
If you’re feeling anxious about market volatility or want to revisit your plan, please reach out to us.
📌 Want to learn more?
Read the full Morningstar article here.