Archive · 18 Jul 2026
25 Years of Market Downturns: Ideal Asset Allocation
Over the past 25 years, stock markets have gone up and down many times.
Some big drops happened because of different reasons, like the Ketan Parekh scam, the Dotcom crash, the Global Financial Crisis, Covid-19, and the US-Iran conflict.
When the market drops, how much money you lose depends on how you split your investments between stocks (equity) and bonds (debt).
If you have more bonds, you lose less money when the market goes down.
For example, during the Global Financial Crisis, people who only invested in stocks lost 60% of their money, but those who had a mix of stocks and bonds lost much less.
The same pattern happened during other market drops.
It's important to remember that while market drops can happen quickly, it can take a long time for the market to recover.
Market corrections since 2000 include the Ketan Parekh scam, Dotcom crash, Global Financial Crisis, Covid-19, and US-Iran conflict.
Drawdowns ranged from 15% to 60%, with recovery times from 90 days to over 1,000 days.
Portfolios with higher debt allocation experienced smaller declines during market corrections.
During the Global Financial Crisis, a 100% equity portfolio declined 60%, while a 50:50 equity-debt mix declined 31%.
The Covid-19 crash saw a 37% decline in a fully equity portfolio, with recovery taking 259 days.
- Who
- Investors and financial analysts
- What
- Analysis of market downturns and ideal asset allocation
- When
- From 2000 to 2026
- Where
- Global financial markets, with a focus on India
- Why
- To understand the impact of different asset allocations during market corrections
- Ketan Parekh Scam Drawdown
- 35%
- Ketan Parekh Scam Recovery Time
- 1,389 days
- Dotcom Crash Drawdown
- 39%
- Dotcom Crash Recovery Time
- 923 days
- 2004 Lok Sabha Election Drawdown
- 30%
- 2004 Lok Sabha Election Recovery Time
- 321 days
- Global Financial Crisis Drawdown
- 60%
- Global Financial Crisis Recovery Time
- 1,000 days
- Covid-19 Crash Drawdown
- 37%
- Covid-19 Crash Recovery Time
- 259 days
- US-Iran Conflict Drawdown
- 15%
- US-Iran Conflict Recovery Time
- Not yet recovered
- Equity Portfolio Decline (Global Financial Crisis)
- 60%
- 65% Equity/35% Debt Decline (Global Financial Crisis)
- 41%
- 50% Equity/50% Debt Decline (Global Financial Crisis)
- 31%
- 25% Equity/75% Debt Decline (Global Financial Crisis)
- 14%
- Equity Portfolio Decline (Covid-19)
- 37%
- Debt Allocation Impact (Covid-19)
- Decline reduces with more debt