Do you remember what you did last week? What about last month when the stock market dropped? If you were scared and pulled your money out, not only has the market recovered the previous losses, but the S&P 500 has reached multiple record highs this month.
While every situation is different, here are some stats based on SPY ETF from 1/29/1993 to 8/7/2024:
- 7938 Trading days
- 640 days closed at an all time high (8%)
- 1848 days closed less than 20% from high (23%)
- 1322 days closed between 10 and 20% from high (17%)
- Longest time between record highs – 3/24/200 to 6/1/2007 (1804 trading days)
- Lowest percentage from record high 43.5% (68.11 from 156.48) on 3/9/2009
- 2151 days closed at least 25% higher from relative low (the lowest closing price between record highs) (27%)
There is always a possibility that you can lose your investment. But this risk can be managed by limiting exposure to the stock market. For individuals not close to retirement, letting the market recover is usually the best option. I view market downturns as an opportunity. If I see oranges on sale at my local grocery store, I am inclined to buy more. Same with the stock market (as a whole). If stocks are down, I can take advantage of the lower prices.