Comparing 2022 to historical downturns

Looking at the top 15

Let’s take a look 2022 compared to the other 15 worst downturns since the Great Depression:

The chart above is a bit messy because we have a lot of different time series on there but the highlighted one is 2022 thus far.

Now, it’s possible that we have already seen the market bottom but given that we are barely off the lows I just included the full thing. The rest of the lines are other downturns from peak to trough.

Ultimately, what we’ve seen so far looks about what we might expect. We don’t know how long this downturn is going to last, so comparing it to some of these other historically bad market events is a bit scary - that context is important though, even if a bit concerning. And, that’s a good thing; it’s prudent to be concerned about what might happen to our money after all.

I think the main takeaway here is exactly that we can’t say much about what the current downturn implies for the future. It could be pretty much over or it could continue to sink. It looks like any other market event both less severe and more severe.

As always, invest according your own personal risk tolerance and remember that what goes up can also come down! History shows us as much.