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Forward returns after a -5% session
A -5% day is extreme — fewer than 30 occurrences since 1928. Most are clustered around 1929, 1932, 1937, 1987, 2008, and 2020. Historically followed by strong forward returns at every horizon.
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.
With fewer than 30 occurrences in nearly 100 years, a -5% day is genuinely rare. The median 12-month forward return exceeds +20%.
Black Monday (-22.6%) was followed by a +21% return over the next 12 months. The economy never entered recession. Pure panic, pure recovery.
Every major -5% day except those in 1929-32 was followed by a full recovery within 12-24 months. The 1929-32 period is the one exception in nearly a century of data.
A single-day decline this severe is one of the better tax-loss harvesting windows markets offer: consider realizing losses in taxable accounts while immediately swapping into similar (not identical) exposure, capturing the deduction without stepping out of a market that has recovered from every such day outside 1929-32.