The traditional bear market threshold is a 20% drop from a market peak. And although, in our view, looking at past market movements is no guide to what happens next, it’s interesting to note that stocks have always bounced back from market downturns.

The market disruption that started in mid-February of 2025, and continued in March and April, has seen declines for the U.S. market as much as 19% at times.

But consistently staying invested in stocks—and even during bear markets—should pay off for you.

Equity markets rise over time

The natural tendency for equity markets is to rise over time. The average annual growth in U.S. equities over the past 97 years has been 9.9% per year. This was 6.8% per year higher than inflation, and 6.6% higher than the return on cash. However, for this additional return, investors faced higher risks. These risks come in the form of higher volatility, but also sharp declines in stock prices that can last several months or longer.

Still, these risks should not be overemphasized—especially for investors with investment horizons of 5 years or longer. For investments into a broad basket of U.S. equities with holding periods longer than 5 years, the risk of capital loss is less than 10%; for holding periods longer than 10 years, less than 5%; and zero for holding periods over 15 years.

The current market decline is mostly attributable to the uncertainty created by the Trump administration’s tariffs, but there may be other contributing factors in the decline such as a mature equity bull market, stretched valuations, fears of a U.S. recession, and heavily indebted companies and investors.

The first of our tables indicates declines in the S&P 500 of 20% or more over the past 70 years. There were only 12 such occasions where the S&P 500 index dropped by more than 20% before it resumed its upward trend.

The worst of these happened between 2007 to 2009 when the market declined by 57%. Across all the bear markets, the average decline was 33% and it took an average of 245 trading days (12 months) from peak to bottom.

However, some bear markets reached their bottoms very quickly (1987, 2018, and 2020) while others took much longer—up to 2.5 years (2002).

Not shown in the table was the biggest of all bear markets which happened during and after the time of the great depression.

Between 1929 and 1932, the U.S. stock market declined by 87% and it took 22 years before the market exceeded its previous high.

How long can the bear market last?

The table above indicates that even when the market falls by as much as 33% before investors get in, they could realistically expect to have a positive return as soon as 12 months later.

So, consistently staying invested in stocks—and even during bear markets—should pay off for you.

Note, though, that you should only invest in stocks if you can afford to hold for a lengthy period—three to five years, say. But if you can afford to do that, bear markets are generally a good time to buy, and a terrible time for investors to sell.