For the Patient, the Crash Wasn’t a Crash

Whenever the stock market rallies, we start hearing how the current environment is “just like 1987.” These comparisons are pretty silly because the investing environment is always changing. It’s never the same.

But even if we consider a major crash, we have to remember how strongly the market rallied before the 1987 crash, and how well it recovered. If we dial back the clock to a year prior to Black Monday, and go out five months after the crash, the market looks just fine. If a modern Rumpelstiltskin has slept for several months, he would not have been surprised by the market’s move.

Consider these numbers: From September 29, 1986 to March 17, 1988, the Dow rose by 18.8%. Sure, that includes an historic drop in between. You can also say I’m cherry-picking, but so is looking at a one-day crash.

My point is that if an investor is patient, even major crashes don’t look so bad.

sc07162014

Posted by on July 16th, 2014 at 10:52 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.