The best returns often follow the largest declines in bear markets

Most of the market’s best days come during—or immediately after—its worst.

That’s right. The top 10 single day returns in the S&P 500 have almost all occurred during bear markets, economic panics, or even global crises.

Let’s look at a few of the big ones:

• October 2008: +11.6% in a single day during the GFC

• March 2020: +9.4% as COVID shutdowns paralyzed the economy

• April 2025: +9.5% during the current global trade war

• October 1987: +9.1% following Black Monday’s historic crash

Each of these came amid deep uncertainty, recession fears, or significant economic pain.

So, why does this matter right now?

Because we may be walking into another one of those painful windows. The data has been flashing yellow for some time now:

• High yield credit spreads are blowing up

• Job growth is slowing, layoffs are increasing

• More bankruptcy announcements

• Consumer sentiment is weakening

• Suspect lending practices (BNPL)

• Trade war with China

• A cautious Fed

Recessions don’t announce themselves. They seep into the system—then the market reacts before the data catches up.

Despite significant declines, history shows what happens next:

After the worst days and deepest drawdowns, forward returns for the S&P 500 over the next 1 to 5 years have often been dramatically positive.

In 2008, in 2020, and in 1987, investors who stayed the course didn’t just survive—they saw powerful recovery and growth.

Though we may be in store for more pain in the short to medium-term, there’s potential light at the end of the tunnel.

This newsletter is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Iron Valley Investments is a registered investment adviser in the State of Pennsylvania. Registration does not imply a certain level of skill or training. A copy of Iron Valley Investments current written disclosure statement discussing Iron Valley Investments business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from Iron Valley Investments upon written request.