A 20% fall from a recent high is commonly called a bear market. A portfolio fully in stocks would lose about a fifth of its value, while a mixed portfolio would usually lose less. To get back to even after a 20% drop, the portfolio needs a 25% gain.
What it means in dollars
$100,000 in 100% stocks: about $80,000 afterward.
$100,000 in 60% stocks, 40% steady bonds: about $88,000.
$100,000 in 30% stocks, 70% steady bonds: about $94,000.
The recovery math
Losses and gains are not symmetric. After a 20% fall, $80,000 must grow 25% to return to $100,000. After a 50% fall, it needs 100%. This is why avoiding very deep losses matters for long-term growth.
Historical context
The US market has entered bear market territory many times. Some declines stopped near 20%; others went much further. Recovery to the prior high has taken anywhere from a few months to several years. History offers context, not a forecast.
Questions to ask yourself
Would I need to sell anything during the drop?
Do I have cash for near-term needs?
Would a larger drop change my plans?
Key takeaways
A 20% drop is the common definition of a bear market.
Your stock share determines how much of the 20% you feel.
