How Does XEQT Perform During Recessions? (Historical Analysis)

Every investor wonders: “What happens to my XEQT when the market crashes?”

Understanding how XEQT performs during recessions is crucial for maintaining confidence during downturns and avoiding panic selling.

This guide analyzes XEQT’s performance through major market downturns, recovery timelines, and what you should do during the next recession.

Quick Summary: XEQT During Recessions

Key takeaway: XEQT drops significantly during recessions but always recovers and reaches new highs.

XEQT’s Expected Behavior (100% Equity)

Since XEQT is 100% equities, it experiences the full volatility of global stock markets across its diverse global holdings.

What to Expect:

During bull markets:

• Returns of 15-25% annually
• Steady gains with minor dips
• New all-time highs regularly

During bear markets:

• Drops of 20-50%
• High volatility and uncertainty
• News headlines predicting doom

After recessions:

• Strong recovery (often V-shaped)
• Returns to new all-time highs
• Continued long-term growth

Historical Analysis: Major Recessions

2008 Financial Crisis (Worst Case Scenario)

Timeline:

October 2007: Market peak

• Hypothetical XEQT value: $100,000

March 2009: Market bottom (-50%)

• Hypothetical XEQT value: $50,000
• Maximum loss: -$50,000

March 2013: Full recovery (5 years)

• XEQT value: $100,000

February 2020: Pre-COVID peak

• XEQT value: $180,000
• Gain from bottom: +260%

Lessons:

• Worst-case scenario: 50% drop
• Recovery took 5 years to break even
• Holding through resulted in massive gains
• Panic selling would have locked in permanent losses

2020 COVID-19 Crash (V-Shaped Recovery)

Timeline:

February 2020: Market peak

• XEQT value: $100,000

March 2020: Market bottom (-32%)

• XEQT value: $68,000
• Maximum loss: -$32,000
• Fastest crash in history (1 month)

August 2020: Full recovery (6 months)

• XEQT value: $100,000

December 2021: New highs

• XEQT value: $130,000

December 2024: Continued growth

• XEQT value: $165,000
• Gain from bottom: +143%

Lessons:

• Fast crash, fast recovery
• Holding through paid off within months
• Those who panic-sold missed the recovery
• Dollar-cost averaging during crash built wealth

2022 Bear Market (Inflation & Rate Hikes)

Timeline:

January 2022: Market peak

• XEQT value: $100,000

October 2022: Market bottom (-18%)

• XEQT value: $82,000
• Maximum loss: -$18,000

July 2023: Full recovery (18 months)

• XEQT value: $100,000

December 2024: New highs

• XEQT value: $125,000
• Gain from bottom: +52%

Lessons:

• Shallower decline than 2008/2020
• Longer, grinding recovery
• Continued investing during dip paid off
• Market fears (inflation, recession) didn’t materialize as badly as predicted

What Actually Happens During a Recession

Month 1-2: The Crash

Market behavior:

• Rapid 20-30% decline
• Daily volatility of 3-5%
• Constant negative news headlines

Your XEQT:

• Portfolio drops significantly
• Daily balance swings wildly
• Panic and fear intensify

What winners do:

• Continue regular contributions (learn when is a good time to buy XEQT)
• Avoid checking portfolio daily
• Remember long-term plan

What losers do:

• Panic sell everything
• Stop contributing
• Try to time the bottom

Month 3-12: The Bottom

Market behavior:

• Continued volatility
• Uncertainty about recovery
• Experts predict further declines

Your XEQT:

• Down 25-40% from peak
• Quarterly statements are painful
• Temptation to sell is highest

What winners do:

• Keep buying (stocks on sale!)
• Increase contributions if possible
• Trust the historical pattern

What losers do:

• Sell at the bottom
• Wait for “all clear” signal
• Miss the recovery

Month 12-36: The Recovery

Market behavior:

• Gradual recovery begins
• Volatility decreases
• Positive news emerges

Your XEQT:

• Returns to break-even
• New all-time highs
• Portfolio stronger than before

What winners do:

• Continue regular contributions
• Appreciate the journey
• Prepare for next cycle

What losers do:

• Regret selling
• Try to time re-entry
• Stay in cash (miss gains)

Real Investor Scenarios During Crashes

Scenario 1: The Panic Seller (Worst Outcome)

March 2020:

• Portfolio: $100,000 → $68,000 (-32%)
• Action: Sells everything in panic

Result:

• Locked in $32,000 loss
• Waits for “all clear” signal
• Re-enters market at $110,000 (missed recovery)
• Final outcome: Lost $42,000 by selling low, buying high

Scenario 2: The Holder (Good Outcome)

March 2020:

• Portfolio: $100,000 → $68,000 (-32%)
• Action: Does nothing, holds through

Result:

• August 2020: Back to $100,000
• December 2024: Portfolio at $165,000
• Final outcome: +65% gain by doing nothing

Scenario 3: The Opportunist (Best Outcome)

March 2020:

• Portfolio: $100,000 → $68,000 (-32%)
• Action: Continues $500/month contributions through crash

Result:

• Buys XEQT at 30% discount for months
• August 2020: Portfolio recovers
• December 2024: Portfolio at $195,000 (includes extra contributions)
• Final outcome: +95% gain by staying disciplined

Should You Worry About XEQT During Recessions?

Short-term (1-3 years): Yes, it will drop

If you need your money in 1-3 years:

• XEQT is not appropriate
• Risk of 30-50% loss is real
• Consider XBAL or XCNS (bonds included)
• Or use high-interest savings accounts

Long-term (10+ years): No, don’t worry

If you won’t need the money for 10+ years:

• XEQT always recovers historically
• Recessions are temporary
• Long-term trend is up
• Time heals all market wounds

How to Survive the Next Recession with XEQT

Before the Recession:

✅ Build emergency fund (6 months expenses) ✅ Understand XEQT’s volatility (expect 30-50% drops) ✅ Set up automatic contributions (remove emotions) ✅ Mentally prepare for portfolio to drop ✅ Don’t invest money you’ll need within 5 years

During the Recession:

✅ Stop checking portfolio daily (ignorance is bliss) ✅ Continue automatic contributions (buy the dip) ✅ Increase contributions if you have extra cash ✅ Read about market history (this has happened before) ✅ Ignore financial media (designed to create fear)

After the Recession:

✅ Review what you learned (build confidence) ✅ Continue disciplined investing (recovery continues) ✅ Don’t get overconfident (next recession will come) ✅ Adjust allocation if needed (more bonds as you age)

XEQT vs Other Options During Recessions

XEQT (100% equity) vs VGRO (80/20) - 2020 Crash:

XEQT:

• Dropped: -32%
• Recovery: 6 months
• 2024 gain: +65%

VGRO (80/20):

• Dropped: -23%
• Recovery: 5 months
• 2024 gain: +50%

Takeaway: VGRO’s bonds cushioned the fall but also limited upside.

XEQT vs Cash - Long Term:

Holding cash during 2008-2024:

• Gained: ~15% (interest)
• Lost to inflation: -20%
• Real return: -5%

Holding XEQT through 2008-2024:

• Gained: ~180%
• Beat inflation by 160%
• Real return: +160%

Takeaway: Staying invested beats cash, even through multiple recessions.

Historical Recession Recovery Times

Trend: Recovery times are getting shorter as markets become more efficient.

The Mental Game: Staying Invested

Why People Panic Sell:

1. Loss aversion - Losses hurt 2x more than gains feel good
2. Recency bias - Recent crash feels worse than historical data suggests
3. Media fear - Headlines designed to create panic
4. Lack of plan - No strategy leads to emotional decisions

How to Avoid Panic:

1. Automate everything - Remove decision-making
2. Don’t check daily - Out of sight, out of mind
3. Read market history - This too shall pass
4. Focus on contributions - Control what you can control
5. Remember your timeline - 30 years, not 30 days

The Bottom Line

XEQT will drop 30-50% during the next recession. This is guaranteed.

XEQT will recover and reach new all-time highs. This is also (historically) guaranteed. This is one of the reasons XEQT is a good investment for long-term investors.

Your success depends on one thing: Will you hold through the storm?

Historical facts:

• 100% of recessions have ended
• 100% of bear markets have recovered
• Investors who held through downturns became wealthy
• Investors who panic-sold locked in permanent losses

The next recession is coming. The question is: Are you prepared to do nothing?

Ready to Build Wealth Through Market Cycles?

Set up automatic XEQT contributions and commit to holding through the inevitable recessions. Your future self will thank you.

Remember: The stock market is the only place where things go on sale and people run away.

Related Reading

• When is a Good Time to Buy XEQT?
• Is XEQT a Good Investment?
• XEQT for Retirement: Complete Planning Guide
• XEQT Holdings Breakdown: What You Actually Own
• Get started with Wealthsimple and earn a $25 bonus

Disclosure: This post contains referral links. Past performance doesn’t guarantee future results. XEQT is a high-risk investment suitable only for long-term investors who can tolerate significant volatility.