S&P 500 Pullback (-5% From High)
The routine pullback threshold
5% pullbacks from trailing highs are common — about 3-4 per year on average since 1928. They almost never become bear markets. Useful for framing routine volatility in client conversations.
| Date | 1M return | 1Y return | 5Y return |
|---|---|---|---|
| 1928-05-22 | -4.1% | +29.8% | -45.9% |
| 1928-12-06 | +5.5% | -2.3% | -56.5% |
| 1929-09-30 | -32.3% | -36.4% | -70.2% |
| 1933-05-15 | +20.6% | +10.5% | +9.9% |
| 1934-02-07 | -4.3% | -21.3% | +6.8% |
| 1935-05-28 | +3.0% | +45.2% | -5.2% |
| 1935-12-02 | +5.1% | +34.4% | -16.6% |
| 1936-06-12 | +5.9% | +4.0% | -32.1% |
| 1936-12-21 | +7.9% | -33.6% | -45.6% |
| 1938-10-11 | +4.6% | +1.9% | -6.6% |
| 1939-10-26 | -4.7% | -17.4% | -0.9% |
| 1942-10-15 | +0.5% | +28.4% | +66.1% |
| 1943-07-27 | -1.8% | +7.1% | +31.8% |
| 1944-03-28 | -1.4% | +14.9% | +25.1% |
| 1945-03-26 | +9.6% | +37.3% | +34.1% |
| 1946-02-19 | +0.0% | -10.7% | +23.1% |
| 1947-10-30 | -2.5% | +5.3% | +64.1% |
| 1948-07-19 | +1.3% | -5.0% | +57.4% |
| 1949-10-17 | +1.5% | +26.9% | +102.1% |
| 1950-06-26 | -4.6% | +16.5% | +135.1% |
| 1951-05-18 | +2.4% | +11.2% | +107.4% |
| 1951-11-21 | +3.8% | +12.0% | +98.4% |
| 1952-10-15 | +3.1% | +0.3% | +67.6% |
| 1955-01-17 | +6.7% | +28.6% | +67.4% |
| 1955-09-26 | +0.1% | +7.4% | +24.5% |
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.
The S&P 500 experiences a 5% pullback roughly every 2-3 months. In a typical year, the market pulls back an average of 14% intra-year yet finishes positive 73% of the time.
The 10% long-run equity return exists precisely because investors must endure regular discomfort. Without pullbacks, everyone would own stocks and the premium would vanish.
An investor who sold after every 5% pullback and waited for a recovery would have underperformed buy-and-hold by approximately 3% per year since 1950.
Five-percent dips arrive every few months, so plan for them structurally: consider keeping the next year of known withdrawals in cash or short-term bonds so a routine pullback never forces a sale. The historical cost of exiting on every 5% decline — roughly 3% a year in foregone return — is the strongest argument for deciding, in advance, to do nothing.