Periods of market uncertainty are nothing new. Over the past decades, investors have repeatedly faced moments that felt like financial crises—most notably during the COVID-19 pandemic, when global markets declined sharply and fear dominated sentiment.
While each period of volatility feels different, the underlying pattern has remained consistent. Markets experience short-term declines, often driven by uncertainty, but they have historically recovered and gone on to deliver long-term growth.
What Market History Tells Us
Looking at recent periods of market stress, a clear trend emerges: sharp declines are often followed by strong recoveries.
During the COVID-19 market downturn:
- The FTSE 100 fell by over 30% before recovering significantly and continuing its upward trajectory in the years that followed.
- The S&P 500 declined by 34%, followed by one of the strongest bull runs in history.
- The Russell 2000 dropped by approximately 35%, before rebounding sharply.
These examples reinforce a key principle: even severe market downturns have historically been temporary.
Intra-Year Declines Are Normal
Short-term market drops are a regular feature of investing. Over the past decade, global equity markets have frequently experienced intra-year declines averaging around 10%, even in years that ultimately delivered positive returns.
For example:
- 2015: −13% intra-year decline, +6% year-end return
- 2016: −11%, +23%
- 2017: −9%, +14%
- 2018: −18%, −5%
- 2019: −11%, +27%
- 2020: −34%, +15%
- 2021: −9%, +25%
- 2022: −14%, −3%
- 2023: −11%, +9%
- 2024: −9%, +11%
Investors who remained invested during these periods were often rewarded over time, despite short-term volatility.
MSCI World Index: intra-year declines vs. year-end performance (2015 to 2024) *
