Stock Market Correction History Chart: A Look at Notable Crashes and Recoveries

A stock market correction is a decline of 10% or more in a major stock market index, and it's a normal part of the market's natural fluctuations.

These corrections can be caused by a variety of factors, including economic downturns, changes in interest rates, and investor sentiment shifts.

The 1987 stock market crash is a notable example of a correction, with the Dow Jones Industrial Average (DJIA) plummeting 22.6% in a single day.

This crash was triggered by a combination of factors, including a global economic downturn and a computer glitch that caused a sudden surge in sell orders.

The 2000-2002 bear market was another significant correction, with the DJIA falling 38.5% over a 2-year period.

The market eventually recovered, but not before the NASDAQ composite index plummeted 78.4% from its peak in 2000.

In 2008, the global financial crisis led to a 53.8% decline in the DJIA over a 17-month period.

The market has since recovered, but the 2008 crisis serves as a reminder of the importance of diversification and risk management in investing.

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Stock market crashes are a sobering reminder of the risks involved in investing. The 1929 stock market crash led to a 47% decline in the Dow Jones Industrial Average.

The 1987 crash, also known as Black Monday, saw a 22.6% drop in the Dow Jones Industrial Average in a single day. This crash was triggered by a combination of factors, including computer trading and a decline in investor confidence.

The 2008 crash was a global financial crisis that led to a 38.5% decline in the S&P 500 index.

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A stock market crash is a decline of 20 percent or more in a few days across a broad section of markets.

The recent drop in Japan's Nikkei stock index, which plunged over 12 percent in a single day, might not be a crash, but rather a correction. A correction is a decline of more than 10 percent, but less than 20 percent, at a slower pace.

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Stock market crashes and corrections are both near impossible to predict and avoid as a long-term investor. If you hold stocks for decades, you will likely experience several market corrections and may even experience a crash or severe bear market.

A correction is even thought to be healthy in rising markets, as it allows the market to rebalance and recover. It's not all doom and gloom, though - you will also be there for the good years or bull markets.

The stock market crash of 1929, infamously known as Black Tuesday, was a devastating event that marked the beginning of the Great Depression.

On October 29, 1929, the stock market plummeted, with the Dow falling by 13 percent on Monday and 12 percent on Tuesday.

The market had been rising steadily throughout the 1920s, reaching an all-time high in September 1929, more than six times its level in August 1921.

The economist Irving Fisher's declaration that stocks had reached a "permanently high plateau" was a starkly incorrect prediction.

The market continued to fall over the next few years, with the Dow closing at 41.22 in July 1932, down 89 percent from its pre-crash high.

It wouldn't regain its September 1929 heights until November 1954.

The Dotcom Bubble Crash was a wild ride that left many investors shaken. It happened between 2000 and 2002.

The economy was growing strongly through much of the 1990s, and the internet had made its debut, making people optimistic about its potential. The tech-heavy Nasdaq Composite increased from about 1,000 to more than 5,000 from 1995 to 2000.

Companies that had nothing to do with technology or the internet changed their name to include “.com” in the hopes that investors would bid up their shares. This was a sign of the times, as investors were desperate to get in on the action.

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In early 2000, the bubble began to burst. Five of the Nasdaq’s 15 worst days ever came between April 2000 and January 2001.

On April 14, 2000, the index fell by nearly 10 percent, its second-biggest single-day decline ever at the time. This was a stark contrast to the previous years, when tech stocks were skyrocketing.

By the time the market bottomed in October 2002, the Nasdaq had lost nearly 80 percent of its value. This was a devastating loss for investors who had put their money into tech stocks.

Shares of companies tied to the “old economy” that had stable and growing earnings saw their shares rise even as tech stocks sold off.

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5% to 10% declines are super common and can occur in an average year. You'll likely see one or more of these declines in a year.

15% declines are still very common, but 25% declines are much less common. This is why buying near 20% declines can be a prudent strategy for long-term investors, as many of those declines don't end up exceeding 25%.

Expect a 25% decline (or more) in the S&P 500 every 5 to 15 years. This is a good reminder to formulate a strategy around what you are willing to hold through, considering your risk tolerance and investment approach.

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15% declines are very common, occurring frequently in an average year. This is a good time to reassess your investment strategy and consider whether you're prepared for such fluctuations.

5% to 10% declines are super common, with one or more of these declines happening in an average year. This is a normal part of the market's ups and downs.

15% declines are still very common, but 25% declines are much less common. This means you should be prepared for the possibility of larger declines, even if they're not as frequent.

30%, 40%, and 50% declines are progressively less common, but do still occur. It's essential to understand these larger declines can happen, even if they're rare.

Most 20% declines are a good buying opportunity, because there are a lot of them, but relatively few of them go on to become 25% or greater declines. This means you should be prepared to take advantage of buying opportunities during larger declines.

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25% declines in the stock market are becoming more rare.

If you look at the chart, you'll notice many declines are around 22% or 24%, but once a decline reaches 25% in the S&P 500, it's more uncommon.

Expect a 25% decline in the S&P 500 every 5 to 15 years.

This is why buying near 20% declines is often a prudent strategy for long-term investors, since many of those 20% declines don't end up exceeding 25%.