A rough way to estimate the hit
If the stock market falls 35% and your portfolio is 60% stocks, the stock portion loses about 21% of the total. If the other 40% holds steady, the portfolio falls around 21%. If bonds rise a little, the loss is smaller; if they also fall, it is larger.
How assets have tended to behave
- Growth and high-valuation stocks: often fall the most.
- Defensive sectors such as utilities and consumer staples: often fall less.
- High-quality government bonds: frequently rose in past crashes, though not in inflation-driven ones.
- Cash: holds its nominal value.
- Gold: mixed results, sometimes a hedge.
The recovery phase
After the drop, recovery depends on the cause and on what you do. Investors who kept contributing during past downturns bought at lower prices. Those who sold at the bottom locked in losses and often missed the early rebound.
Example
In 2008, a 100% stock portfolio following the S&P 500 fell around 50% peak to trough. A 60/40 stock and bond mix fell roughly 30%. Both eventually recovered, but the 60/40 portfolio got back to its previous high sooner.
Key takeaways
- Stock share is the main driver of how far a portfolio falls.
- Bonds and cash have often cushioned crashes, but not every time.
- Behavior during the recovery matters as much as the drop itself.