Stock Market Recovery Time: Four Falls, Two Ways In

A lump sum put into US shares at the March 2000 peak took 140.9 months to be worth what went into it. The same sum put in at the January 2022 peak took 23.3 months.

We tested what happens when the money goes in month by month instead. Measured to a recovery that holds, monthly investing shortened stock market recovery time in three of the four falls. In the fourth it lengthened it.

We used the daily closing price of SPY (the S&P 500 exchange-traded fund, or ETF) from 29 January 1993 to 19 October 2026. The prices are adjusted for dividends and splits, so the peak prices below are adjusted figures, not the price quoted on the day. In this article, "US shares" means SPY.

A fall starts at a peak, the highest close before the price drops. A peak-to-low drop is called a drawdown.

We tested two ways of putting money in at each of four peaks. The lump sum puts $12,000 in on the peak day and adds nothing afterwards. The monthly investor puts $1,000 in on the peak day, then $1,000 on the first trading day of every following month. The payments continue for as long as the test runs.

The two are not the same amount of money. By August 2010 the investor who began at the March 2000 peak had paid in $126,000. The question here is not which one ends richer, because far more money went into one of them. The question is how long each waits to be worth what has gone in.

Recovery means durable recovery: the point after which the holding is never again worth less than the money paid in. We check that at each monthly purchase date. A first crossing that later slips back under does not count.

The same comparison over fixed twelve-month windows is in our guide to dollar-cost averaging against a lump sum. For monthly investing over a fixed ten-year run, see our worked example of investing a fixed sum each month for ten years.

From the 24 March 2000 peak the lump sum took 140.9 months. It fell 48.5% by 9 March 2009, then returned to $12,000 on 22 December 2011.

From the 9 October 2007 peak it took 61.7 months. It fell 55.2% by 9 March 2009, the deepest drop in the test, then returned on 28 November 2012.

In 2020 it fell 33.7% by 23 March. It returned on 3 November 2020, after 8.5 months. In 2022 it fell 24.5% by 12 October. It returned on 13 December 2023, after 23.3 months.

Depth and waiting time do not line up. The 2007 fall was the deepest at 55.2% and took 61.7 months, while the shallower 2000 fall took more than twice as long.

Chart 1 shows how far a lump sum fell from each peak.

The four bars in Chart 1 run from the mildest fall, 24.5% in 2022, to the deepest, 55.2% in 2007. Two of the four passed 48%.

Monthly investing recovered sooner in 2000, 2007 and 2022. Money arriving during a fall buys at lower prices, which pulls the average cost down and brings the holding back above the money paid in sooner.

In 2000 the monthly investor recovered on 2 August 2010, after 124.3 months, which is 16.6 months sooner than the lump sum. In 2007 it took 33.8 months, 27.9 months sooner. In 2022 it took 14.9 months, 8.4 months sooner.

Across the four falls the median wait was 42.5 months for the lump sum and 33.1 months for monthly investing.

Chart 2 sets the two waits side by side. The table gives the full detail.

In Chart 2 the pale monthly bar is shorter than the blue lump-sum bar in three of the four pairs. The 2020 pair is the one where it is taller.

Months to durable recovery, the point after which the holding never sat below the money paid in again. Bold marks the faster of the two. Source: YX Insights price data

It depends which recovery you measure. On the first crossing back above the money paid in, monthly investing was quicker in all four falls, 2020 included: 3.4 months against the lump sum's 8.5. The reversal appears only on durable recovery, where the monthly investor waited 32.4 months.

What separates the two readings is one month. In October 2022 the monthly holding was worth 0.996 of the money paid in, a shortfall of 0.4%. That single reading pushes the durable recovery from June 2020 out to 1 November 2022.

The average cost is what put the monthly holding so close to the line. The lump sum bought once, at $307.46, then never bought again. By October 2022 it was worth 1.132 for every dollar put in.

The monthly investor kept buying through the 2021 rally, which lifted the average cost to $349.56. That is about 13.7% above the lump sum's single entry. With SPY at $348.03 that day, the average purchase sat a shade above the market.

Chart 3 shows both as a value for every dollar paid in, so the $12,000 and the growing monthly total sit on the same footing.

In Chart 3 the lump sum line falls furthest in the spring of 2020, then clears 1.0 and stays clear. The monthly line falls less far, because much of the money had not gone in yet, but it runs close to 1.0 through 2022.

A later fall often sets it. The 2000 and 2007 monthly investors both recover on 2 August 2010, because both were still under water when the recovery after 2009 lifted them. The 2020 case is the same effect: its date comes from the 2022 fall, not from 2020.

The four falls overlap. A monthly investor who began in March 2000 was still paying in when the 2007 peak arrived, so these are not four independent tests.

Four falls on one fund is a small record. We model no tax and no dealing costs. Every $1,000 goes in on the day it arrives, so no cash sits waiting.

Across these four falls a lump sum waited between 8.5 and 140.9 months to be worth what went into it, with a median of 42.5. Paying in monthly shortened that wait three times out of four. The once it did not, a later fall set the date.

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Across four falls in US shares, a lump sum took a median of 42.5 months to be worth what went into it. The quickest took 8.5 months, from the 2020 peak, while the slowest took 140.9 months, from the 2000 peak. Four falls is a small record, so these are past results, not a forecast.

Measured to a recovery that holds, monthly investing shortened the wait in three of the four falls we tested and lengthened it in 2020. The median fell from 42.5 months for a lump sum to 33.1 months for monthly investing. On a first crossing instead, monthly investing was quicker in all four.

The monthly holding came within 0.4% of the money paid in during October 2022, which reset its durable recovery to November 2022. Its average cost had risen to $349.56 through the 2021 rally, against the lump sum's single entry at $307.46, so a modest fall was enough to put it under.

With dividends counted, a lump sum fell 48.5% from the 2000 peak, 55.2% from the 2007 peak, 33.7% from the 2020 peak and 24.5% from the 2022 peak. The deepest fall was not the slowest to recover. The 2000 fall took 140.9 months, against 61.7 months for 2007.

DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.