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This month marks five years since the COVID-19 market crash. On March 9, 2020, U.S. stocks plunged nearly 8% in a single day. However, the market rebounded within just four months, making it the fastest recovery in 150 years.

In contrast, the 2021-2022 downturn, triggered by the Russia-Ukraine war, inflation, and supply chain disruptions, took 18 months to recover—four times longer than the COVID crash.

Key Lessons from Market Crashes

1. Predicting recovery time is impossible.

2. Panic-selling during crashes results in long-term losses.

3. Markets always recover and reach new highs.

How Often Do Market Crashes Occur?

The frequency of crashes depends on historical scope and identification criteria. Paul Kaplan (Morningstar) compiled stock market data dating back to 1871, which highlights key collapses:

• The Great Depression (1929): A 79% loss, the worst in 150 years.

• The Lost Decade (2000-2013): The Dot-Com Bubble + Great Recession resulted in a 54% market decline over 12 years.

• Inflation, Vietnam, Watergate (1973-1974): A 51.9% decline fueled by OPEC oil embargo, war, and political instability.

• COVID-19 Crash (2020): Fastest recovery (4 months), smallest pain index.

• Russia-Ukraine War & Inflation (2021-2022): A 28.5% drop over 9 months.

Measuring Market Pain: The Pain Index

Kaplan’s Pain Index quantifies crash severity by considering depth and recovery time:

• The Great Depression (1929): 100% Pain Index (worst ever).

• Cuban Missile Crisis (1962): 22.8% decline but rapid recovery, making it 28.2x less painful than 1929.

• COVID-19 (2020): Least painful crash in 150 years, thanks to a rapid 4-month recovery.

The Five Worst Market Crashes in 150 Years

1. World War I & Spanish Flu (1911-1918)

   • Triggered by antitrust rulings, war, and pandemic.

   • Loss: -51% (from $100 to $49.04).

2. Great Depression (1929-1932)

   • Stocks fell 79% and took 4+ years to recover.

3. Post-Depression & WWII (1937-1945)

   • Market briefly recovered in 1936, then fell 50% again due to policy shifts and WWII.

4. 1970s Stagflation (1973-1982)

   • OPEC oil embargo, inflation, and Watergate caused a 51.9% decline.

   • Recovery took 9+ years.

5. The Lost Decade (2000-2013)

   • Dot-Com Bust (2000-2002) and Great Recession (2008-2009) wiped out 54% of market value.

Lessons on Managing Market Volatility

History proves markets always recover—but timing is unpredictable.

• The best strategy is a diversified long-term portfolio.

• Investors who stayed invested always saw long-term gains.

• A $100 investment in 1870 would be worth $3.1 million today.

[Compliance Note]

• All posts by Sellsmart are for informational purposes only. Final investment decisions should be made with careful judgment and at the investor’s own risk.

• The content of this post may be inaccurate, and any profits or losses resulting from trades are solely the responsibility of the investor.

• Core16 may hold positions in the stocks mentioned in this post and may buy or sell them at any time.