DCA Performance During Economic Recessions

Dollar Cost Averaging During Official US Recession Periods

Economic Recession Analysis

This study examines Dollar Cost Averaging performance during officially declared US recessions as defined by the National Bureau of Economic Research (NBER). Recessions represent periods of significant economic decline affecting employment, production, and consumer spending.

Historical US Recession Overview

NBER-defined recessions covered by dataset (2012-02-01 - 2025-01-31)

Recessions

2.0

Avg. Months

Total Months

Severe

Period	Name	Duration	Severity	Description
2020-02-01 to 2020-04-30	COVID-19 Recession	2 months	Sharp but Brief	Global pandemic, widespread business closures, unprecedented economic shutdown

S&P 500 Performance During Recessions

Market behavior during economic contractions

Recession	Start Price	End Price	Price Change	Min Price	Max Drawdown
COVID-19 Recession	$3248.92	$2912.43	-10.36%	$2237.40	-31.13%

DCA Analysis Parameters

Recession Period

Investment Amount per Period

Investment Frequency

DCA Performance Summary

COVID-19 Recession (2020-02-01 to 2020-04-30)

Recession Context

Global pandemic, widespread business closures, unprecedented economic shutdown

Duration: 2 months

Severity: Sharp but Brief

During Recession

Total Invested: $1,000

Shares Accumulated: 0.3563

Average Cost Basis: $2806.74

Value at Recession End: $1,037.66

Recession Return: +3.77%

Post-Recession Recovery

ONE YEAR LATER

Date: 2021-04-30

Portfolio Value: $1,489.69

Total Return: +48.97%

TWO YEARS LATER

Portfolio Value: $1,480.5

Total Return: +48.05%

Investment Metrics

Investment Count 2 purchases

Price Range $2237.40 - $3386.15

Recession Duration 2 months

Market Drawdown -31.13%

Investment Transaction History

Chronological record of DCA purchases during recession

Date	S&P 500 Price	Investment	Shares Bought	Total Shares	Avg. Cost	Current Value	Unrealized Return
2020-02-03	$3248.92	$500	0.1539	0.1539	$3248.92	$500	+0.00%
2020-04-01	$2470.50	$500	0.2024	0.3563	$2806.74	$880.2	-11.98%

Analysis Interpretation

During the COVID-19 Recession recession (2020-02-01 to 2020-04-30), Dollar Cost Averaging with $500 monthly investments resulted in 2 total purchases over 2 months.

This recession was classified as Sharp but Brief and was caused by global pandemic, widespread business closures, unprecedented economic shutdown. The strategy achieved an average cost basis of $2806.74 per share during the economic downturn.

Recession Performance: By the end of the recession, the DCA portfolio showed a 3.77% return, demonstrating resilience during the economic contraction.

Recovery Analysis: One year after the recession ended, the DCA portfolio achieved a 48.97% total return. Two years post-recession, returns reached 48.05%, reflecting the volatility of post-recession markets.

ECONOMIC INSIGHT

Economic recessions often create attractive entry points for systematic investors. While markets may decline during the recession itself, the disciplined approach of Dollar Cost Averaging typically positions investors well for the eventual economic recovery and market expansion that follows.

METHODOLOGY NOTE

Recession periods are based on official NBER dating. Analysis assumes dividend reinvestment and excludes transaction costs, taxes, and fees. Recovery analysis uses actual market performance where available. Past recession performance does not guarantee future results.

Data sources: MacroTrends S&P 500 Historical Data, NBER Recession Dating