Will The Stock Market Crash Again?

If history is any judge, crashes ALWAYS occur—always. The market’s got more mood swings than a soap opera star, and while a crash can be dramatic, it’s part of a well-rehearsed cycle that ends with a rebound.

• 56 Corrections (10%+ drops): Roughly one every 1.7 years over the past 100 years.
• 22–26 Bear Markets (20%+ drops): Occurring about every 3.8–4 years.
• ~13 Major 30%+ Declines: Including notorious episodes like 1929, 2007–2009, and 2020.
• ~7 Deep 40%+ Drops: With the big ones in 1929, 1973–74, and during the Great Depression.
• Only 3 50%+ Drops: Most notably, the 2007–2009 crisis at about 57%.
• No Modern 60%+ or 70%+ Crashes: These only happened during the Great Depression.

​When you’re scanning the headlines and scrolling through endless market predictions, you might ask: “Will the stock market crash again?” It’s a question as old as the market itself. We dove into over a century of S&P 500 data to pull out some cold, hard facts, and here’s what we found.

Let’s get one thing straight: stock market corrections (those pesky 10% drops) are more common than you’d think. In the past 100 years, we’ve seen around 56 corrections, roughly one every 1.7 years. Think of it like that annoying friend who always drops by unannounced. It’s almost become a routine part of the market’s behavior. And while a 10% drop might make your heart skip a beat, it’s usually just a hiccup on the way to long-term gains.

Now, bear markets – when things get really gloomy with drops of 20% or more – are less frequent but still a regular visitor. Depending on who you ask, there have been between 22 and 26 bear markets since the late 1920s, roughly every 3.8 to 4 years. The variation in numbers largely comes down to how analysts decide to count those wild swings, especially during the chaos of the Great Depression. But the takeaway is clear: severe downturns are less frequent but when they hit, they hit hard.

Then we got into the heavy artillery – the major 30%+ declines. There have been about 13 of these seismic events over the last century. They’re the real shockers, the moments that remind you why you double-check your investment portfolio in a panic. You’ve probably heard of the infamous crashes in 1929, the 2007–2009 global financial crisis, and even the rapid dive during the COVID panic in 2020.

But wait, it gets even more dramatic. When you push the envelope to 40%+ drops, history records about 7 instances. These are the moments that turn investors’ hair white, like the 1929 crash and the brutal bear market of 1973–74. And while those numbers might seem alarming, it’s worth noting that the worst of the worst – the 50%+ declines – have only happened about three times. The 2007–2009 crisis, with a peak-to-trough drop of roughly 57%, stands as the worst in the modern era. It’s a reminder that while the market does get wild, the truly catastrophic drops (60% or 70% and beyond) have only been witnessed during the Great Depression.

So, what does all this mean for you? Simply put, the market has its ups and downs – sometimes in rapid, unpredictable bursts. But over the long haul, these corrections and bear markets are part and parcel of the journey toward growth. History shows that while massive drops grab headlines, they are the exception rather than the rule. Since World War II, no modern downturn has come close to the staggering 60%+ or 70%+ declines of the 1930s. That’s a testament to the resilience and evolution of the market.

This analysis stands as one of the most data-rich, factual, and comprehensive looks at the history of stock market drops. By examining over a century’s worth of S&P 500 data, we get a clear picture: while significant downturns do occur, they’re cyclical and part of a larger story of recovery and growth. So, when you hear the market is “about to crash,” take a deep breath and remember that history – our trusted guide – shows us that these cycles are as predictable as the seasons.

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​Sources:

• Reuters: https://www.reuters.com/markets/us
• Yardeni Research: https://www.yardeni.com
• Investopedia: https://www.investopedia.com
• Hartford Funds: https://www.hartfordfunds.com
• Potomac Advisors: https://www.potomacadvisors.com