The U.S. Stock Market Crashed 15 Times in the Last 100 Years. History Tells Us It's Going to Crash Again -- But Hold Fast.

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Rich Smith, The Motley Fool

Sun, Mar 23, 2025, 5:08 AM 6 min read

Since closing astatine its highest ever level of 6,144 connected Feb. 19, this scale tracking the show of America's 500 biggest companies tumbled rapidly to adjacent astatine 5,522 connected March 13, 10.1% beneath its all-time high. It's recovered since and, arsenic of Friday's marketplace close, the S&P 500 is presently down only... 7.8% astatine a small nether 5,668. So we're retired of correction territory, and possibly acceptable to resume moving higher again.

Or possibly not.

Established backmost successful March 1957, the S&P 500, per se, hasn't been astir to way the full past of the U.S. banal market. But the Standard Statistics Company, predecessor to S&P Global (NYSE: SPGI), has, starting successful 1923, erstwhile it began tracking the play banal show of 233 U.S. companies.

Over that astir 100-year clip period, these S&P indexes person recorded nary less than 15 abstracted carnivore markets successful which S&P companies mislaid 20% oregon much of their value. Some of these crashes were gigantic, specified arsenic the 86% diminution that began successful 1929, oregon the lone somewhat little unspeakable 60% diminution that began successful 1937.

Other crashes were somewhat little serious. In 1956, an lawsuit that whitethorn person sparked the instauration of the S&P 500 itself saw the banal marketplace diminution only 21.5%. Or see the 1990 carnivore market, which mightiness not adjacent person been a method carnivore market, depending connected however acold retired you number your decimals, due to the fact that the diminution was lone 19.9% apical to bottom.

Still, implicit clip and connected average, carnivore markets are plentifulness serious. Across 15 S&P carnivore markets successful 100 years, we find investors endure much than a 38% diminution successful the mean banal marketplace crash.

Bear Warning connected a roadworthy sign.

That fig -- 38% -- stuck retired to maine precocious erstwhile considering a study from the St. Louis Fed, which crunched U.S. Bureau of Economic Analysis information to hole a amazingly wide graph of what "normal" firm nett margins look similar successful the U.S.

Basically, they look similar this:

Chart shows humanities mean nett margins successful the US.

Which is to accidental that, for the past 75 years oregon so, from 1936 done 2011 -- oregon practically the full past of the U.S. banal market, but lone the clip of the Great Depression -- U.S. companies person averaged determination betwixt 3.8% and 7.2% nett margins connected their revenues.

Something changed successful 2012, however, and past changed much dramatically erstwhile COVID-19 arrived successful 2020, and pushed U.S. firm nett margins acold beyond their "normal" range. History suggests this benignant of a leap higher whitethorn not beryllium sustainable. And here's what worries me:

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