A Long-Term Perspective on Market Downturns and Historical Bear Markets

In financial markets, a pullback is defined as a 5% decline, a correction as a 10% drop, and a bear market as a 20% decrease. Though unpredictable, history shows these patterns repeat, with recoveries often following downturns.

Quick Take: While volatility is a normal part of investing, the sharpness and longevity of each bear market varies widely and, in many cases, S&P 500 cumulative returns are significantly greater following a bear market.

S&P 500® Index Cumulative Returns¹ (%)
(1926-2025)

1. Monthly returns are shown for S&P 500^® Index, except for the Global Pandemic and Energy and Inflation Spikes market events, which are daily.
2. Based on the closest month-end date after the bear market end date. Uses monthly returns.
Sources: FactSet, NBER, MSNBC, and S&P Dow Jones Indices. The Index is unmanaged, is not available for investment, and does not incur expenses. As of June 30, 2025. S&P 500^® Index (gross dividends reinvested) in U.S. Dollar. The Fed refers to the Federal Reserve Board. A bear market represents a peak-to-trough price decline of -20% or more in the S&P 500^® Index. A bull market is a prolonged period in which investment prices are rising or are expected to rise. Past performance is no guarantee of future results.

IMPORTANT INFORMATION

The S&P 500^® Index is a capitalization-weighted index of 500 stocks. The S&P 500^® Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

A bear market is a prolonged period in which investment prices are falling or are expected to fall, accompanied by widespread pessimism. Although figures can vary, a downturn of 15%-20% in a key index (Dow Jones Industrial or S&P 500^®, for example) from a recent peak over at least a two-month period is considered an entry into a bear market. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly.

A bull market is a prolonged period in which investment prices are rising or are expected to rise. A bull market may also be a prolonged period of time when prices are rising in a financial market faster than their historical average. Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology.

The indices are unmanaged, are not available for investment, and do not incur expenses.

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Past performance does not guarantee future results. There is no guarantee any of these trends will continue. Investing involves risk. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. All data referenced are from sources deemed to be reliable but cannot be guaranteed as to accuracy or completeness. Information or opinions expressed herein are general and educational in nature and have been provided for information purposes only. Neither the information nor opinions expressed constitute investment advice and are not intended, nor should be considered, as an endorsement of any specific investment strategy. The information and opinions contained herein are current as of the date published and are subject to change without notice. Information has been obtained from sources believed to be reliable, but its accuracy, completeness, and interpretation are not guaranteed. AMG Funds LLC cannot guarantee that the information herein is accurate, complete, or timely. AMG Funds LLC makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any reliance on, such information. See wealth.amg.com for additional disclosures, our privacy policy, and terms of use.