Last year, we endured some major shifts in the market. Just 23 trading days resulted in the S&P 500 falling -34%. By June it had topped +40% (from its 23 March low). It can be disturbing when this happens in such a short timeframe, especially with the media going ballistic with doom and sensationalism. Is this usual?
Yes, it is. Large ups-and-downs occur all the time - though not for the past 10 years. So it feels unusual and can be tempting to time moves or cash out until things feel okay again. Here are the seven biggest market events over the last 90 years:
- The 1929 Great Depression Crash lasted well into the 1930s. It's still by far the craziest ride in history. The market was up +32% in '29 until peaking in September. Then it fell -45% in two months. Then it rose +28%. Overall, the year was down just 8.3%. By four months into the next year the market was up +22%. It didn't last, as the next eight months would see a -44% drop. By December it was still down -25%.
- 1931 had stocks rising in two months by +19%. It then flipped, closing around -57% by mid-December. That year is the worst year on record, finishing -44%. Would you have stayed invested? Another -51% drop over the next five months of 1932 would really test you! (This was THE bottom as it turned out.) Without warning or good news, markets rallied +112% in only 12 weeks. The S&P still fell again another -32% to settle for the entire year at -8.6%. Selling didn't subside in 1933 as there was another fall of -25%. After that, investors enjoyed a staggering +121% in July (and a bump of -29%) to finish the entire year +50% - one of the best years ever. 1934 saw another rise of +21% (and a fall of -29%).
- The '73/'74 oil crisis marked another rollercoaster of returns. Stocks fell -37% before bottoming in October, then rallied +21% the next month, ending the year at -26%.
- 1980 saw stocks falling -17% only to rise +43%. The market was up +32% by year's end. 1982 witnessed a similar event with -17% followed by a +40% jump. Year-end stocks were up +20%.
- The Black Monday crash of '87 saw the market falling -34% in only a week. It had risen +40% beforehand and ended the year almost +6% (after the worst one-day crash in history).
- The late '90s asset bubble had a +20% gain for five years straight up until 1999; yet in '98 it had a -9.3% fall before increasing +34% ending the last year of last century at +28%. As the dot-com bubble burst nudged by 9/11, three big 7. price swings occurred in 2001. Stocks fell -19% before rising +19%; then there was a -26% crash to close the year around -12%.
- The 2009 GFC bottomed in early-March '09 at peak gloom but not before being slammed at -28% from 1 January. Prices then leapt +67%, closing the year at +26%.
What would you have done as an investor in response to each of these market events? Hindsight is a wonderful thing...
Three demographic discoveries that affect investments
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Learn more in our demographics White Paper: The GDP Downshift - Preserving Equity Returns
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