The housing crisis in 2007 and 2008 that trigged the Great Recession was brutal for equity investors. Most major market indexes including the S&P 500 suffered peak to trough drops of as much as 57% over a 20 month period. Put another way, more than half of your portfolio was wiped out in less than 2 years as you can see from the chart below.
I was listening to a Masters in Business podcast where Barry Ritholtz was interviewing the legendary investor Bill Miller. If you are not familiar with Bill Miller, he ran Legg Mason’s Capital Management Value Trust mutual fund, which beat the S&P 500 for 15 consecutive years from 1991 to 2005. This was a remarkable feat considering this period spanned both the dot com bubble and the deep bear market that followed after the bubble burst.