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US Equity Returns Following Sharp Downturns

US Equity Returns Following Sharp Downturns

April 7, 2020

Sudden market downturns can be unsettling. But historically, US equity returns following sharp downturns have been positive.

  • A broad market index tracking data since 1926 in the US shows that stocks have generally delivered strong returns over one-year, three-year and five-year periods following steep declines.
  • Just one year from a decline of 10% or 20%, returns where higher than the long-term average of 9.6%. And the return after a 15% decline was within half a percentage point of the average.
  • Looking thee and five years later also shows annualized returns higher than the long-term average.Sticking with your plan helps put you in the best position to capture the recovery.

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