No Time to Panic?
The war in Iran has led to significant disruptions in financial markets and affected client portfolios to varying degrees. Most equity markets recorded declines of 5–8% in March and, at the time of writing, have pushed year-to-date performance into negative territory. Other asset classes have also been affected, and with the economic consequences still uncertain, concerns about a deeper recession have emerged. So, what should clients do? In most cases, we believe the answer is: not much.
The following analysis puts the recent market turbulence into perspective. Alongside our monthly exchange between Klaus W. Wellershoff and Patrick Müller, you will find further input and analysis in our Quarterly Investment Committee.
Over more than 150 years of financial history, stock market declines have been frequent, sometimes severe, and often unsettling. Yet the long-term evidence leads to a consistent conclusion: markets recover, and disciplined investors are typically rewarded for staying invested rather than reacting emotionally.
How often do market downturns occur?
Looking at historical data since the late 19th century, bear markets, commonly defined as declines of 20 percent or more, have occurred regularly. The corrections observed in March 2026 do not meet this threshold. Studies suggest that, on average, a meaningful bear market occurs roughly once per decade over a 150-year horizon. Shorter-term data since 1929 indicates a higher frequency, with such events occurring approximately every 4 to 5 years. These periods include well-known episodes such as the 1929 crash, the inflation shock of the 1970s, the dot-com collapse, the 2008 financial crisis, and the 2022 invasion of Ukraine.
Magnitude and duration of market declines
In terms of magnitude, typical bear market declines have been significant but not catastrophic. Modern datasets indicate an average drawdown of around 30 to 35 percent from peak to trough. While extreme cases such as the Great Depression resulted in much deeper losses, these remain statistical outliers. More moderate corrections of 10 to 20 percent occur more frequently and tend to resolve faster, often within months.
Duration is another important dimension. Historically, bear markets have been relatively short compared to bull markets. The average duration is approximately 9 to 12 months, although this varies depending on the underlying economic shock. More importantly, the recovery phase, defined as the time required to regain previous peak levels, has typically taken between 2 and 3.5 years. Some recoveries have been much faster, such as after 1987 or during the COVID-19 period, while others, such as after the dot-com bubble, took considerably longer.
What history tells us about investor behaviour
What stands out from this long-term perspective is not the severity or frequency of declines, but the consistency of recoveries. Even after the most significant downturns, markets have eventually reached new highs. This reflects the underlying drivers of equity markets, including economic growth, innovation, population growth, and productivity gains. While short-term shocks can affect valuations, they rarely change these long-term fundamentals in a lasting way.
For investors, the key implication is behavioural rather than analytical. Selling in periods of stress often leads to realised losses and the risk of missing subsequent recoveries, which can be both rapid and unpredictable. Historical evidence shows that some of the strongest market gains occur shortly after the sharpest declines, making market timing extremely difficult.
A Wealth Office perspective
From a Wealth Office perspective, the focus is not on short-term market movements, but on whether the asset allocation continues to align with the investor’s objectives and risk profile. A clear investment strategy (Plan.), the selection of suitable managers (Find.), and the ongoing review of results and costs (Control.) form the basis for assessing market phases such as the current one.
Conclusion
Market downturns are an inherent part of investing, not an exception. Over the long term, they have been frequent, sometimes severe, but ultimately temporary. The evidence consistently supports a long-term approach. Investors who remain patient, diversified, and disciplined are more likely to benefit from the market’s structural growth than those who react to short-term volatility.
Review your portfolio
Market phases like these provide an opportunity to review whether your portfolio is still aligned with your objectives. Use our tools to gain a clearer view:
