Markets have dropped. What does history tell long term investors?

Markets have had a rough few days, led by falls in the big technology companies. If you have started investing recently, seeing your portfolio go down can be unsettling. So let's zoom out.

The long term picture

This live chart shows an S&P 500 tracker fund (SPY), which follows the 500 largest US companies, since it launched in 1993. Use the buttons along the bottom to switch between time periods.

Every fall that felt frightening at the time is now a small dip on a line that goes up over the long run.

Every big fall since 2000, and how long it took to recover

Here are the major falls in the US market since 2000, measured on a total return basis (with dividends reinvested), using month end prices of an S&P 500 tracker fund.

Some recoveries took months. The worst took four to six years. But every one of them recovered.

Even the worst timing worked out

Imagine you had invested at the end of 1999, just before the dotcom crash: close to the worst possible moment. You then sat through two crashes of around 50% in your first ten years.

By the start of November 2026, with dividends reinvested, that money would have grown about eight times, roughly 8% a year. £10,000 would have become around £80,000 (in US dollar terms, before fund fees).

The people who lost out were mostly those who sold during the falls and missed the recoveries.

What this means for you

• Falls are normal. A drop of 10% or more happens every year or two. It is the price of the higher long term returns that shares offer.
• Time in the market beats timing the market. Nobody reliably predicts the bottom. Some of the best days come straight after the worst ones.
• Only invest money you won't need for at least five years. Keep your emergency fund and short term savings in cash, such as an Islamic savings account, so you are never forced to sell in a fall.
• Keep investing regularly. If you invest monthly, falls mean you buy more units for the same money.

A note for halal investors

We use the S&P 500 here because it has the longest public record. It is not itself Shariah compliant. Shariah screened global funds hold many of the same large companies, so they have tended to move in a similar way, though not identically. The lesson is the same: diversify, stay invested and think in decades, not days.

Want a clear plan you can stick to when markets wobble? Join our free online session, An Introduction to Halal Investing, on Sunday 6 December at 8pm, or find out about the Nisba Academy.

Figures are calculated from monthly total return data for SPDR S&P 500 ETF (SPY), December 1999 to 6 November 2026, and are rounded. This article is for education only and is not personal financial advice. Past performance is not a reliable guide to future returns, and the value of investments can go down as well as up.