Stock market crises as an opportunity: what investors can learn from history

• History shows: Stock markets regularly recovered after crises and often reached new highs afterwards
• Skilful investments during a bear market could lead to above-average returns
• In times of high volatility and geopolitical change, broad diversification is crucial

The US government's erratic tariff policy recently caused sharp price losses and high volatility on the financial markets. Especially in times of high uncertainty, a look at history can help to correctly classify dynamics - as the current analysis by Thomas Romig, Chief Investment Officer (CIO) Multi Asset at Assenagon, shows. "Stock market crises are not just a threat to assets. They can also open up opportunities for prudent investors," says the capital market expert.

A look at history shows that there have been twelve bear markets in the USA since 1945, in each of which the S&P 500® recorded a short fall of more than 20 percent. Whether it was the oil crisis in 1973/74, the bursting of the dotcom bubble in 2000, the US real estate crisis that led to a global financial crash in 2007 or the Covid pandemic in 2020 - the causes of the realpolitik events that unsettled investors and led to massive price declines were manifold.
 

Lessons from history: make targeted use of market corrections

As varied as the causes of severe stock market crises may have been, according to Romig, a recurring pattern can be recognized: "The stock markets have fully recovered after every far-reaching correction - and subsequently even reached new highs." What's more: "Investors who invested in the S&P 500® in phases of severe market distortions - specifically in a bear market after a fall of more than 20 percent - were able to achieve above-average returns in the past," as Romig impressively demonstrates in his analysis.

The global balance of power and trading chains will be reconstituted in the future. However, the CIO Multi Asset is convinced that this will not upset the equities markets in the long term. "Crises are a natural part of the capital markets. They clean up the investment landscape and promote the innovative strength of companies." Nevertheless, situational losses in phases of upheaval can of course be very extensive. This makes it all the more important for investors to decide on an investment according to their personal risk-return profile. "Long-term investors with a higher risk tolerance can make targeted use of phases of high volatility, while conservative investors are more likely to benefit from a broadly diversified asset allocation." Active diversification across several asset classes is the most effective way to keep price losses and volatility in check.

You can read the detailed analysis by Thomas Romig, CIO Multi Asset, in the latest issue of Perspectives.

Here you can download a printable photo of Thomas Romig here.

Munich/Luxembourg, May 20, 2025