Keep calm and stay invested: lessons from history to beat market turbulence

28 January 2026

Markets move up and down – it’s a normal part of investing, but we understand it can feel unsettling.

At Brighter Super, we want to reassure members by helping you to understand the changes, why markets behave this way, and how staying calm and invested, focused on long-term growth during volatile times, can make a meaningful difference.

Here, we look at how past market downturns have played out and the strong recoveries that followed – and what these patterns can teach us today.

Recent volatility: what happened in early 2025

When markets fall, it can be tempting to switch to a more conservative investment option. However, doing so at the wrong time can mean locking in losses, getting stuck there and missing out when markets recover.

During periods of global turbulence, many investors feel safer shifting to cash. But history shows that markets often bounce back faster than people expect.

One recent example occurred in February 2025, new global trade tensions emerged, following US tariff announcements. Concerns about disrupted supply chains and rising import costs caused noticeable short-term market volatility.

For many investors, moments like these can feel concerning. But markets often react sharply at first and then settle as more information becomes available – and that pattern played out again in 2025.

As trade discussions progressed and countries signalled a willingness to avoid escalation, markets began to stabilise. By June 2025, share prices had rebounded, and Brighter Super’s diversified investment options had fully recovered from the earlier dip.

The key lesson is that short-term market drops caused by events like tariff announcements are a normal part of investing - and reacting too quickly can mean missing the recovery that often follows.

Brighter Super’s diversified investment strategies are designed to absorb periods of volatility and position portfolios for long-term growth. 

Market downturns through the decades, and the recoveries that followed

Black Monday and the Asian financial crisis (1987-1990s)

The 1987 stock market crash, known as Black Monday, was one of the most dramatic downturns in modern financial history.

On 19 October 1987, the New York Stock Exchange’s Dow Jones Industrial Average fell 22.6%¹. The following day the Australian market fell 25% and had declined by 42% by the end of October.²

There were concerns that there was such a destruction of wealth, and a hit to confidence, that it would impact on the economy.

The US Federal Reserve Bank had been raising interest rates prior to the crash but ultimately eased rates because of fears of the impact of the stock market crash on the economy and to provide significant liquidity to markets in the wake of the financial market upheaval.

The economy continued to recover, with the share market surpassing the previous peak within two years after the sudden crash.

In Australia, interest rates had been falling in the year leading up to the stock market crash and this easing of monetary policy coincided with financial deregulation. 

With new foreign banks entering the market and providing a wave of credit, the much-feared downturn morphed into a booming economy. With the ensuing deep recession in the early 1990s, Australia took until 1993 to move above the pre-crash peak.

However, from the low point in the market in February 1988, the next decade averaged a 12% return per annum, showing the long-term rewards for investors who stayed the course.³

A decade later, the Asian financial crisis also caused concerns that a collapse in the region would hit the global and Australian economies. The US Federal Reserve eased rates in response to these concerns, and the Reserve Bank of Australia kept rates lower than they might have been otherwise.

Economic growth and earnings remained strong and provided the backdrop for the dot-com bubble of 1999.

Australia sidesteps dot.com bust (early 2000s)

The dot-com bubble inevitably burst in early 2000, with the US market crashing down but the Australian market held up relatively well.

The US equity market took two years to go from peak to trough. But the Australian share market held up relatively well due to its lack of technology exposure.

In this instance it took six years for the US to return to its 2000 peak, but Australia surged on the back of the China commodity price boom and highlights the benefits of having a diversified source of returns and remaining invested. Chinese Gross Domestic Product grew by 12% between 2003 and 2007 with steel production almost double this.⁴

In the first half of 2008, commodity markets were very tight with many prices at historically high levels. It would only take a slight slowdown to get commodity prices falling sharply.

The Global Financial Crisis (2007-2009)

The series of financial shocks that led to the Global Financial Crisis was unleashed by a banking crisis brought on by a collapse in the US real estate market.

The crisis forced some US banks to seek aid from the US federal government and sparked the collapse of Lehmann Brothers. It also sparked a collapse in commodity prices. For example, in October 2008, the oil price had dropped below US$70 a barrel after peaking two months earlier at US$145 a barrel.

Calm was ultimately restored by a range of measures to stabilise the financial system, such as the guarantee of bank deposits and capital injections to banks. However, it took until February 2009 for a bottom to be reached. 

The depth of the downturn this time meant it took almost six years for both the US and Australian share markets to regain their previous peak. Median superannuation returns fell for two years before commencing an uninterrupted 10 year run of strong returns.⁵

COVID-19: lessons from a sharp downturn and swift rebound (2020-2022)

A clear example of the risks of switching at the wrong time occurred during the COVID-19 market crash, in March 2020.

Nearly 10% of Brighter Super Pension members switched significant allocations of their investments to cash. Around 70% switched late in the month, close to the bottom of the share market crash, meaning many missed the strong rebound in share markets that followed.

Staying invested is often the best long-term strategy. Over time, short-term losses are typically recovered and can turn into solid gains.

For instance, during the period that included the COVID-19 downturn and recovery, Brighter Super’s Growth option returned an annual average of 9.75% over the seven years ended 30 June 2024. Our Balanced option returned an annual average of 8.50% average over the same period.⁶

Economies tend to grow over the medium term, company profits rise, and employment and wages follow this trend. Markets over time will reflect what the economy is doing, and governments tend to step in when the system is confronting a major crisis.

Brighter Super’s investment options are designed to navigate the inevitable ups and downs in markets. Reacting to short-term volatility by switching investments at the wrong time can make it harder to benefit from future recoveries. 

How markets recovered over time

The graph below shows how markets have recovered and grown again after various market crises since the 1980s.

Market conditions in 2024/25

In the years since the pandemic, markets have faced renewed volatility driven by inflation, higher interest rates and global uncertainty.

After a period of rapid rate increases, many central banks slowed or paused further increases through 2024 and into 2025 as inflation started to ease. Attention then turned to managing slower growth and occasional market swings.

Since October 2025, investors have shown growing concern about whether recent gains by companies linked to artificial intelligence are sustainable. We continue to monitor the situation closely to ensure our portfolios remain well positioned through changing market conditions.

Resilience through volatility

Despite the volatility, markets remained resilient in 2025, with share prices reaching new highs at times.

Brighter Super’s diversified investment options performed well during this period. Returns dipped when trade tensions escalated in mid-February 2025 but had fully recovered by June 2025.

This can be seen in the graph below showing how our diversified options accounts rebounded, based on a $10,000 investment made on 12 February 2025⁷.

To give a broader perspective, the second graph looks at our diversified options’ performance over nearly 12 months, based on a $10,000 investment made on 1 July 2024⁷.

Lessons on riding out ups and downs

Reflecting on these market downturns and recoveries, volatility in your super’s returns is a natural part of how financial markets work. It’s important to remember that market movements can be both up and down.

These shifts are a reminder that periods of volatility don’t last forever. Over time, economies expand, company earnings rise, and markets recover – potentially rewarding investors who stay invested through short-term turbulence.

Brighter Super designs its investment options to diversify across asset classes, which can help them navigate the market swings that inevitably occur.

All of these periods of market volatility are different in their causes and timings. However, the one common outcome is that investors who have held the course and remained invested have been able to experience both sides of market volatility – helping them to build their super through strong, long-term returns.

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