Stats › Bear markets and drawdowns › Drawdown frequency
How often the stock market falls
A drawdown is just the distance from the last high to wherever the market is now. Everyone who holds stocks lives through them constantly, and almost nobody carries an accurate sense of how often they arrive or how long they hang around. That gap between what actually happens and what feels normal is where most bad decisions get made.
So this page collects the record. How frequently the S&P 500 has fallen 5%, 10%, 15% and 20% since 1954, how many days each of those has taken to go from the previous high down to the low, and when each size last happened. There's also an explanation of the counting rule behind the frequencies, because deciding when one decline ends and the next one starts is a judgement call, and different publishers make it differently.
The reason I wanted this written down is that a decline feels like an event when you're inside it and looks like weather when you line up seventy years of them. Knowing the base rate doesn't make a falling market pleasant. It does stop the ordinary version from feeling like the end of the world. One note before you read on: I've flagged a widely repeated frequency figure on this page that no source actually publishes. The publishers are linked at the bottom with their data ranges, so you can go and confirm which version is real.
On the record since 1954 the S&P 500 has fallen 5% or more about twice a year, 10% or more about once every 18 months, 15% or more about once every three years, and 20% or more about every six years. The bigger the decline the longer it takes: a 5% dip has averaged 46 days from high to low, a 20% bear 402 days. These are averages of irregular events, not a schedule, and the widely circulated claim that 5% declines happen three times a year does not appear in any Capital Group or Ned Davis publication.
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Below this point there are 8 sections, 1 chart, 1 table and 3 named sources, roughly 1200 words of it. Every figure carries the source it came from and the date the data is from.
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