This year (2018) will mark the 10-year anniversary of the global financial crisis, which also ushered in the worst economic downturn in the U.S. since the Great Depression and one of the worst bear stock markets in recent history. Those who lived through that troubling period (like us) remember the extreme swings in volatility and the compounding losses. When the bear market finally bottomed out in March 2009, the S&P 500 Index had shed 56% of its value.
A bear market of that magnitude is rare—according to Yardeni Research, only one other bear market since 1929 has been worse. (That was between 1930-32, when the S&P 500 lost 83% of its value.) However, Investors should pay attention to the magnitude of losses, perhaps more so than their frequency, because of the time it takes to recover from these kinds of extreme losses.
In the case of the last bear market, it took around four years for the S&P 500 to make up all of its lost ground. Add to that the 517 days from peak-to-trough of the bear market itself, and you get a total of five-and-a-half years of time lost trying to reclaim market value.