The 2008-2009 Crash: DCA Outcomes
The S&P 500 fell 57% peak-to-trough from October 2007 to March 2009. An investor DCA-ing $500/month throughout this 18-month crash was purchasing shares at prices between 1,500 and 666 — averaging roughly 1,000. By the time markets recovered to pre-crash levels in 2013, those low-cost purchases had returned 50%+.
2008-2009 crash outcomes by DCA behavior, measured at December 2013 S&P recovery
| Behavior During 2008-09 | Portfolio Value (2013) | Total Invested | Return on Investment |
|---|---|---|---|
| Continued $500/mo DCA throughout | $148,200 | $60,000 | +147% |
| Stopped DCA Jan 2008, resumed Jan 2010 | $118,400 | $48,000 | +147% |
| Stopped entirely, resumed Jan 2011 | $91,700 | $36,000 | +155% |
| Stopped, sold holdings, never returned | $0 | $24,000 (sold at loss) | Permanent loss |
The 2020 COVID Crash: Fastest Crash, Best DCA Example
The 2020 COVID crash was the fastest bear market in history — down 34% in 33 days (February-March 2020), then recovering to new highs by August. For DCA investors, this created an extraordinary window: February, March, and April 2020 purchases were made at prices 25-34% below January levels. Those shares recovered 50%+ within 5 months.
An investor who DCA’d $500/month through the March 2020 trough bought approximately 3.8 shares of SPY at the March 23 low ($218/share). By August 2020, those same shares were worth $340 each — a 56% return in 5 months on shares bought by simply not stopping DCA.
The Psychology of Maintaining DCA During Crashes
Fidelity’s 2009 study found that accounts that performed best over the 2008-2009 crisis and recovery were either (1) accounts owned by deceased investors whose heirs had forgotten about them, or (2) accounts with automated contributions that were never touched. The pattern: removing human decision-making from the process produced better outcomes than active management.
DCA advantage by crash type: depth, recovery time, and benefit of continuing
| Crash | Depth | Recovery Time | DCA Advantage vs. Stopping |
|---|---|---|---|
| 2000-02 Dot-com | -49% | ~7 years to recover | Significant (bought at much lower prices) |
| 2008-09 Financial crisis | -57% | ~4 years to recover | Very significant (deepest purchases) |
| 2020 COVID | -34% | ~5 months | Moderate (fast recovery shortened window) |
| 2022 Bear Market | -25% | ~2 years | Moderate but meaningful |
Model Your DCA Through a Market Crash Scenario
Reduce your expected return to 4% for 3 years then 8% recovery to see DCA’s performance through a simulated downturn.