The climb back: What past downturns tell us about the road to recovery

Encouraging lessons about volatility and the power of staying invested

 

WHEN MARKETS GET CHOPPY, being reminded that volatility is “a normal part of investing” can seem less than reassuring. “But, going back to 1950, though each period of volatility has had its unique causes, each was also followed by recovery,”1 says Marci McGregor, head of Portfolio Strategy for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank. Taking a look back at how markets have historically performed offers useful perspective to help investors navigate the ups and downs, she notes.

 

In the video above, McGregor sits down with CIO Investment Strategist Kirsten Cabacungan to explore the four phases of market recovery, from reset to regrowth, mapped out by the CIO, based on historical trends. “This market period has been extremely volatile,” says Cabacungan. “But when you look at the maximum drawdown so far in the S&P 500, it hasn't breached the 20% decline that we typically see in a bear market.2 After these periods of declines, we historically have seen the index recover — some on average within 10 months.”3

 

In the near term, Cabacungan suggests that investors play defense and offense within portfolios, focusing on high quality, and staying diversified. “Remember that the very best days in the market have often followed the very worst days, and it's impossible to time both,” adds McGregor.

 

For a deeper dive on past downturns and their recovery periods, read “Eyes on the road ahead,” filled with charts and infographics that capture the phases of past market recoveries and the potential opportunities that volatility can create. Get the latest market insights from the CIO by tuning in regularly to the Market Update audiocast series.

Choose your advisor in a more personalized way

All our advisors are committed to putting your needs and priorities first. Find some who match your personal preferences too.

Loading...

Try Advisor Match

Answer a few questions

Want us to contact you?

Submit a request

Phone

Loading...

Email

View your advisor

1 Sources: Bloomberg; Yardeni Research. Data as of April 9, 2025.

2 The 2025 max drawdown reflects data from February 19, 2025 to April 8, 2025. Sources: Bloomberg; Yardeni Research. Data as of April 9, 2025. Chief Investment Office; Bloomberg.

3 Reflects the average length of time it took for the S&P 500 to recover its prior peak following bear market declines between 20-30% since 1950. Sources: Chief Investment Office; Bloomberg; Yardeni Research. Data as of April 9, 2025.

 

Important disclosures

The opinions expressed are as of 4/23/2025 and are subject to change.

 

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.

 

Some of the risks involved with equity securities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments.

 

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

Switch to Accessibility Friendly View

How we can help

Explore what it’s like to work with a Merrill Financial Advisor

Start here

Related Articles

Time to reconsider international stocks?

Read more

New trends driving equity markets now

Read more

Market Decode: The coming mineral mining surge

Read more

Information for:

Corporations & Institutions Job Seekers Media & Journalists Shareholders

Get in touch:

Contact Us

Connect with ML®:

Investment, insurance and annuity products:

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
Are Not Deposits Are Not Insured by Any Federal Government Agency Are Not a Condition to Any Banking Service or Activity

Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory and other services. Additional information is available in our Client Relationship Summary. 

This material does not take into account a client’s particular investment objectives, financial situations, or needs and is not intended as a recommendation, offer, or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

Insurance and annuity products are offered through Merrill Lynch Life Agency Inc., a licensed insurance agency and wholly owned subsidiary of Bank of America Corporation.

Trust, fiduciary and investment management services, including assets managed by the Specialty Asset Management team, are provided by Bank of America, N.A., Member FDIC and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”), and its agents.

Bank of America Private Bank is a division of Bank of America, N.A.

U.S. Trust Company of Delaware is a wholly owned subsidiary of Bank of America Corporation.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

© Bank of America Corporation. All rights reserved.

Patent: patents.bankofamerica.com

7873572-EXP-2026-10-29
X

You need to answer some questions first

Then we can provide you with relevant answers.

Get started