Recent stock market volatility rivals or surpasses those of 1987, 2000, 2001, and 2007 to 2009. However, each of these non-health events share similar themes. Investors and experts alike collectively asked questions such as “where will the bottom of the market be?” and “when will the recovery start?” As financial advisors, we hear these questions from our clients. However, instead of focusing on what we can’t control, we actively seek out opportunities for our clients.
Ned Davis, a long-time, high-profile market strategist, said “The aim is to make money, not be right.” It’s impossible to predict the future of the markets, which is why we instead look back and examine the impact of prior crisis situations, how the market responded, and our processes designed to help grow and preserve our clients’ wealth. Past history cannot predict future results, but we can learn a tremendous amount about each situation.
In October of 1987, the market dropped 22.6% in one day. At the time, this was the biggest one-day decline in history and, for the first time, people could watch the financial crisis unfold live on TV. Although shocking, the markets recovered 57% of the loss in the next two trading days. Two years later, the markets rose to new highs.
Investors were spoiled by the unusual gains technology stocks offered in the late 1990s. The Dotcom bubble saw the tech-heavy NASDAQ rise fivefold from 1995 to 2000. The index peaked in March 2000 and eventually dropped 77%. Reeling after the Dotcom bubble burst, the horrific terrorist attacks of 9/11 followed. The markets tumbled, but eventually our economy recovered, and the markets peaked in October 2007.
Soon after, we experienced the Great Recession, which was considered by many to be the most serious downturn since The Great Depression. The U.S. markets suffered declines of more than 50%, but this was eventually followed by one of the longest bull markets in history. In the last 40 years, we have also experienced serious health epidemics, such as SARS, Swine Flu, Cholera, MERS, Ebola, and Zika, which impacted the markets. Each one was followed by market pullbacks and eventual recoveries, many only taking six months.
As we navigate challenging times, it is important to remember your long-term strategies and the reasons why you invested in the first place. Market corrections take time – that’s why we help our clients align what is important in their life with their portfolio.
Contact Kim, Korey, or Tyler at the Kletschke Wealth Management Group and let us show you how we can help! Kletschke Wealth Management Group
700 4th Street, Suite 100
Sioux City, Iowa 51101
(712) 252-6931[email protected]