MW I invested $100,000 in the S&P 500 in February and lost $10,000. How long will it take to recover?

By Quentin Fottrell

'This was my first time experimenting with the stock market'

Dear Quentin,

I made the mistake of throwing $100,000 in the S&P 500 in early February. A few days after, I lost close to $10,000 due to the drop in the market, which started toward the end of February. This was my first time experimenting with the stock market. I thought I could give it a try and let it sit for a few years. My adviser tells me to wait it out but doesn't give me a time frame.

How long will it take to get back the almost $10,000 that I lost?

First-time Investor

Related: 'I'm deeply disturbed': My portfolio lost 20%. With Trump's trade war, do I sell my stocks and buy gold?

Dear Investor,

It could be one year, two years or two months. Any economist or financial adviser who gives you an answer is either deluding themselves or trying to make you feel good. Don't trust a financial adviser who will tell you what you want to hear. Listen to the adviser who says, "I don't know, but the long-term trajectory shows that the stock market, like the sun, rises."

The stock market officially entered correction territory earlier this month - a 10% fall from a recent peak. A bear market is a prolonged fall in markets and/or a 20% drop from a recent peak. We've had two bear markets in the 2020s, and economists point out that we've never had three bear markets within five years of each other. Still, there's a first time for even this.

Over the last five years, we've had a worldwide pandemic, a new administration that is forging a different course from all previous Republican and Democratic administrations in modern times by redefining the postwar Western alliance, and introducing sweeping tariffs, which are due to be implemented on April 2, a date President Donald Trump calls "liberation day."

"This is the beginning of Liberation Day in America," Trump told NBC News $(CMCSA)$ Sunday. "We're going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they've been taking over the years. They've taken so much out of our country, friend and foe."

Those tariffs will likely be met by retaliatory tariffs from Canada, Mexico, European Union and China.

You invested that money for your future self.

It may not be liberation day for your paper losses today, but as a first-time investor it's important to keep in mind that you only lose that $10,000 if you decide to sell. Investing in the stock market is a long-term strategy, and, while you may have wished you had waited to invest that $100,000, you may feel better five or 10 years from now. You invested that money for your future self.

The ability for the market to regain its lost ground depends on the severity of the economic backdrop. The S&P 500 SPX fell 18% in 2022, gained 26% in 2023, rose another 25% in 2024, figures show, and historical data show that it can take one month (as in 2023), three months (in 2015 and 2016), six months (2009, 2010, 2011, 2018, 2020) or, more commonly, one year to recorrect.

Fasten your seatbelt. Expect short- to medium-term volatility. The Cboe Volatility Index VIX is seen as a key indicator of the market's volatility. Known as the market's "fear" gauge, it's currently over 20 and has remained elevated for most of March. Volatility is a reflection of the uncertainty in the market, and as long as that persists, so, too, will the dramatic fluctuations.

Another gauge: The University of Michigan consumer-sentiment survey was revised lower to 57 in March from a preliminary reading of 57.9, significantly below the 64.7 in February. It fell for a third consecutive month and reached its lowest since November 2022, reflecting consumers' worries about their personal finances, inflation, interest rates and the labor market.

Related: My wife and I found two stocks with a 20% return. We have $75,000. Should we invest it in the S&P 500 or individual stocks?

But here's the takeaway: For every person like you who is worried about the stock market falling further, there may be another looking at the bigger/longer picture and feeling positive about an upcoming trade war, as nearly half the U.S. population voted for Trump, who, while campaigning last year, characterized "tariff" as a "beautiful word." That share of the electorate may believe the trade war will ultimately be a boon for American economic growth and independence.To humor you, here's a worst-case scenario. After the 1929 market crash, when the stock market eventually lost roughly 90% of its value, the Dow Jones Industrial Average took more than 25 years (till Nov. 23, 1954) before it closed above the level at which it closed on that fateful day. But analysts say it actually took five to 10 years, accounting for deflation.

Among the many lessons from the Great Depression (and 2008 financial crash) is that one man's meat is another man's tofu, where one person sees stability, another expects chaos. The Yale economist Irving Fisher famously said pre-crash stock-market prices had reached "what looks like a permanently high plateau," according to this Oct. 16, 1929, report in the New York Times.

It took more than five years for the market to recover from the 2008 financial crisis, which was caused in part by predatory and subprime lending in the mortgage market and lax financial regulation. Diversification is also key to weathering such storms: Many companies survived the 1929 and 2008 financial crashes, and, yes, some did not.

Diversification is also key to weather such storms.

Economists' current predictions on recession vary. Citing the proposed tariffs, Polymarket, economist Mark Zandi and J.P. Morgan, among others, put the chance of a recession in 2025 at roughly 40%. In a note published Sunday, Goldman Sachs said it sees a 35% risk of recession over the next 12 months, raising it from a 20% risk in its previous economic prediction.

"I'm raising my odds that a recession will begin sometime this year to 40%, up from 15% at the start of the year," Zandi wrote on X. "Last week's economic data were disconcerting, including the slide in consumer confidence, punk consumer spending, and persistently high inflation." He also cited a forthcoming trade war, assuming Trump's tariffs go ahead as hoped.

But 40% is not 60%. "Recession remains less likely than [likely] only because layoffs remain low and job and income growth positive," Zandi adds. "This Friday's jobs report for March will give us a sense of whether this continues. It is premature to expect much fallout from the trade war and DOGE ["Department of Government Efficiency"] cuts in the jobs data, suggesting a monthly payroll job gain of close to 150,000."

Don't miss: Everything you wanted to know about a recession but were afraid to ask

Economic calendar: Watch this week for manufacturing, construction and jobs data

So where does that leave you? You're $10,000 down on paper. You may lose more before this period of turmoil is over, or not. But as a first-time investor, it's a rookie mistake to fret about your investment every day for the next year, and beyond. You've got to live your life, and rest assured that the market will rise and fall year after year until you hang up your working boots.

Related: Will Trump's policies lead to a recession? I'm 62 and earn $50,000 a year. How should I invest $100,000?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.

The Moneyist regrets he cannot reply to questions individually.

More columns from Quentin Fottrell:

I met a friend for lunch. When the check arrived, she said, 'Thank you so much for paying!' Was I taken for a fool?

'She has been telling him lies': My sister convinced my father to sign everything over to her. What can I do?

My father died, leaving everything to my 90-year-old stepmother. Do I have a right to ask her if I'm in her will?

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-Quentin Fottrell

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March 31, 2025 08:25 ET (12:25 GMT)

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