Markets recover faster than we think

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CHART 1 • Markets recover faster than we think

The S&P 500 has a long record of climbing back to its previous high far sooner than sentiment suggests. Even the sharp falls of recent years proved surprisingly short lived.

The standouts are the two major recessions. The 2000 cycle took almost 90 months to repair and the 2007 crisis needed more than 60. These were genuine breaks in the system with sustained economic damage. Outside those periods the pattern is very different. The 1990 bear market recovered in under 10 months. The 1998 sell off took only a few months. The 2011 wobble was even quicker. Even the Covid collapse which was one of the fastest market drops in modern history was back at new highs within months. The more recent setbacks in 2022 and 2025 appear to be following that same shorter cycle.

The broader message is that markets often heal much faster when the underlying economy remains intact. Time spent below water is usually far shorter than the headlines suggest.

Source: A wealth of common sense

What I find most striking is not the speed of past recoveries but how rarely people remember this pattern when they need it. Fear makes each downturn feel unprecedented. History shows the opposite. Most drawdowns resemble each other far more than they resemble the worst crises.

I have four more charts in the full edition that build on this theme of perception versus reality in markets, labour and global competition. They are for paid subscribers. If you enjoy Five Killer Charts and want the complete daily edition, consider becoming a paid subscriber.

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