How long each crash took to heal

There are two defensible ways to measure how long a crash lasted, and they answer different questions. Measuring from the trough asks how long the recovery rally took once the worst was over. Measuring from the peak asks how long the market took to make a new high. The first is a fact about the rally; the second is a fact about the holder. This page reports both, and leads with the second, because the reader who is trying to understand the risk of buying near a top is asking the second question.

The gap between the two figures is the time spent falling. A decline that takes a year to complete and two years to recover produces a peak-to-peak interval of three years, of which only the last two are upward. That asymmetry — long falls, longer climbs — is a general property of deep drawdowns, and it is why the recovery figures are consistently larger than the decline figures in the table above.

It is worth being explicit about what these numbers assume. They assume the holder stayed. A recovery duration is the time the market took to regain a level, not the time any particular investor took to break even, because an investor who sold at the trough never recovered at all. The figures also assume the peak in question was actually exceeded, which is true for every episode except the pending one. Both assumptions are reasonable for a description of the market and neither is a statement about any individual's outcome.

The drawdown record publishes the depth of each of these episodes alongside its recovery, and the all-time high history shows the peaks these recoveries were measured against.