What is the longest time for the stock market to recover?
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. For gold bugs, the longest recovery period spanned more than 26 years (from October 1980 until April 2007).
The average bear market cuts stock prices by 36% from peak to trough and these declines typically last over a year and a half. And stock market recoveries are even longer, taking almost two and half years on average.
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.
Here, history is much kinder to to the investor - the US market has provided tremendous returns to investors and has never gone to zero. And while theoretically possible, the entire US stock market going to zero would be incredibly unlikely.
Less than two years later, US stock markets surpassed their pre-crash highs.
Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.
The market sees a greater than 80% chance of at least five rate cuts from current levels by the end of 2024. Investor optimism about the economic outlook has improved dramatically from a year ago, but there's still a risk that Fed policy tightening could tip the economy into a recession in 2024.
In a recent article, “The financial crisis at 10: will we ever recover?” (Economic Letter, Federal Reserve Bank of San Francisco, August 13, 2018) economists Regis Barnichon, Christian Matthes, and Alexander Ziegenbein argue that the last financial crisis cost every American about $70,000 in lifetime present-value ...
"There's a solid chance that we see renewed weakness in the economic and earnings numbers as we move through 2024. The deepest concern is that the inflation numbers have started to renew their move higher." Bodenmiller agrees with that sentiment. "Inflation data continues to be a major market catalyst," he says.
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 percent of stocks never recover?
Using the Russell 3000 returns since 1980, JPM concluded that roughly 40% of all stocks had suffered a permanent 70%+ decline from their peak value. These are not temporary declines during the tech boom-bust or during the financial crisis, but declines that were not subsequently recovered.
After a spectacular 2023, stocks are off to the races again in 2024. YTD, the Dow is up 2.72%, the S&P is up 7.28%, and the Nasdaq is up 6.41%. (And that's on top of last year's 13.7%, 24.2%, and 43.4% respectively.)
Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.
The worst thing you can do to your 401(k) is to cash out if the market crashes. Market downturns are generally short and minimal compared to the rebounds that follow. As long as you hold on to your investments during a bear market, you haven't lost anything.
- Began – August 1929.
- Ended – November 1932.
- Duration – 33 months.
- Percentage decline from top to bottom – 79%
The Dow Jones did not return to its peak close of September 3, 1929, for 25 years, until November 23, 1954.
S&P 500 could hit 6,500 by end-2025, says Capital Economics.
For 2024 we expect decent returns on fixed income. Higher yields provide a good income base and yields are likely to fall slightly further in the near-term. Moreover if the global economy slows more than we currently expect, than bond yields can fall much more, driving the performance of fixed income portfolios.
Highlights: 5.2% 10-year expected nominal return for U.S. large-cap equities; 9.9% for European equities; 9.1% for emerging-markets equities; 5.0% for U.S. aggregate bonds (as of September 2023). All return assumptions are nominal (non-inflation-adjusted).
Stocks and bonds deliver positive returns and cash underperforms both as the Fed pivots to rate cuts. Stocks and bonds may both be poised for success in 2024. Easing inflation and a pivoting Fed should reduce headwinds that have faced both asset classes in recent years.
What is the best investment in 2024?
- High-yield savings accounts.
- Certificates of deposit (CDs)
- Bonds.
- Money market funds.
- Mutual funds.
- Index Funds.
- Exchange-traded funds.
- Stocks.
As of February 27, 2024, Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM) has an expense ratio of 0.06%. Its portfolio comprises 450 stocks, and net assets totaling $63.3 billion as of January 31, 2024.
Indeed, the nation's 401(k)s and IRAs lost about $2.4 trillion in the final two quarters of 2008, and the average loss that year for workers who had been on the job for 20 years was, according to one estimate, about 25 percent.
- Sheldon Adelson. Rank: 1. Wealth lost in 2008: $24 billion. ...
- Warren Buffett. Rank: 2. Wealth lost in 2008: $16.5 billion. ...
- Bill Gates. Rank: 3. ...
- Kirk Kerkorian. Rank: 4. ...
- Larry Page. Rank: 5. ...
- Sergey Brin. Rank: 6. ...
- Larry Ellison. Rank: 7. ...
- Steven Ballmer. Rank: 9.
To wrap it up, though the world might witness financial problems in the coming years, probably because the recession is part and parcel of an economic cycle, the great financial crisis of 2008 was a phenomenon in itself and is most likely not going to occur again. Happy Investing!
