The S&P 500 was down nearly 20% from the highs at the Liberation Day lows in early April.
The index was showing a 15% loss for the year as of April 8th.
From the lows, the market took off like a rocket ship, rising almost 40% from there through year-end. The S&P 500 finished 2025 with a gain of almost 18%.
To recap, there was a peak-to-trough drawdown of around 19% but the market still finished the year up nearly 18%, a double-digit gain despite a double-digit drawdown.
One of my favorite aspects of stock market behavior is that this kind of thing is perfectly normal.
Just look at the data via Exhibit A:
The same thing happened in 2020 and 2023 as well. However, this is not just a 2020s phenomenon.
Of the 36 calendar years since 1990, 21 have had intrayear peak-to-trough drawdowns of 10% or worse. Of those 21 years, only 7 ended with a loss on a total-return basis, meaning 14 times the market finished in positive territory.
And 11 out of those 14 years in the black experienced double-digit gains.
That means roughly 40% of all years since 1990 that have gone through a double-digit drawdown have finished the year up 10% or more.
The stock market has the remarkable ability to produce both gains and volatility in the same year.
Of course, this doesn’t happen every time. In 2000, 2001, 2002, 2008 and 2022 there were double-digit drawdowns and the market finished the year down double-digits.
This is one of the difficult parts about investing in the stock market — most of the time it comes roaring back from big losses but other times it take a little while.
There will be times when the stock market will test your patience again in the future.
You have to survive short-term and long-term volatility in the stock market to earn your just rewards.
Further Reading:
Do We Need a Long Bear Market?
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