The S&P 500: owning a slice of big U.S. companies.

How it works

The S&P 500 is a stock market index of large U.S. companies, maintained by S&P Dow Jones Indices. You can't buy an index directly; people get exposure through index funds. Per the SEC's Investor.gov, an index fund is a mutual fund, ETF or unit investment trust with a passive strategy designed to achieve approximately the same return as an index before fees, which usually means less trading and lower fees than actively managed funds.^[1] Over time, higher fees can significantly lower returns.^[1]

Documented history: crashes and recoveries

U.S. stocks surpassed their pre-crash highs less than two years later. Black Monday led to circuit breakers: the NYSE now halts trading temporarily when the S&P 500 falls 7%, 13% and 20%.^[2]

Watch out: risks

• Deep drawdowns: a 57% fall happened within living memory.^[3]
• Concentration: it's U.S. large companies only, not the whole world or small companies.
• Fees & behavior: fees compound, and selling in a panic locks in losses.
• Past recoveries are history, not a promise.

Sources

1. SEC Investor.gov, "Index Fund" glossary
2. Federal Reserve History, "Stock Market Crash of 1987"
3. Federal Reserve History, "The Great Recession"

Fetched Oct 13, 2026.