S&P 500 Correction (-10% From High)
The textbook correction
An official correction (-10% from peak) occurs roughly once per year on average since WWII. Only about 20% of corrections become bear markets. The other 80% recover without ever reaching -20%.
| Date | 1M return | 1Y return | 5Y return |
|---|---|---|---|
| 1928-06-12 | +2.6% | +41.4% | -37.0% |
| 1929-10-04 | -28.1% | -35.8% | -69.4% |
| 1933-05-08 | +22.5% | +15.7% | +19.9% |
| 1935-05-16 | +11.7% | +55.1% | +2.5% |
| 1936-05-19 | +7.2% | +17.4% | -32.3% |
| 1937-07-28 | -3.8% | -25.6% | -49.4% |
| 1938-11-28 | +3.9% | -1.4% | -7.2% |
| 1940-05-10 | -19.9% | -18.7% | +25.9% |
| 1941-07-17 | -1.8% | -14.3% | +75.4% |
| 1943-11-08 | +1.5% | +15.1% | +32.4% |
| 1946-02-26 | +6.8% | -7.9% | +29.1% |
| 1948-01-22 | -2.9% |
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
Since 1945, roughly 80% of 10% corrections recovered without reaching -20%. The base case after a correction is recovery, not continuation.
The typical correction takes about 4 months to fully recover. Only corrections that coincide with recessions (2001, 2008) take significantly longer.
Median 12-month return from the -10% threshold is approximately +15%. Buying corrections has been one of the most reliable long-term strategies.
Show this chart BEFORE the correction happens. Clients who expect 1-2 corrections per year are far less likely to panic-sell during one.
An official correction is a natural rebalancing checkpoint — with roughly 80% of them recovering before ever reaching bear territory, the -10% mark has historically favored trimming overweight bonds or deploying earmarked cash back toward equity targets. Consider writing that trigger down now so the decision is mechanical when the headlines are loudest.