Market Crash Hall of Fame

Today’s Wisdom:

February came to an end with significant drops in the stock market as fear over the Coronavirus grew in our country. It’s bounced back some, but the big swings have made many investors worry that a crash might be coming. Let’s take a step back and gain perspective by revisiting the worst market crashes of all-time.

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What You’ll Learn:

If you’ve looked at any financial news recently, it’s impossible to not see or hear something about the market downturn. Coronavirus fears caused the Dow to plunge 1,191 points, which was the worst one-day drop in terms of points we’ve ever had.

Investors are concerned and worried about how far things could fall. Are we at the start of next crash?

Let’s try to gain a little perspective on that question by looking back over the course of history. This episode of Money Wisdom aims to revisit the worst days and years the market has ever experienced to show you that things have been much worse. But it also goes to show you that the market always perseveres. It’s easy to get caught up in the moment, especially when it comes to your money and your retirement, but perspective is key.

To do that, we put together a Market Crash Hall of Fame with five of the darkest times in our economy. Joel will tell us about each of these:

  • Black Tuesday
  • Black Monday
  • The Dot Com Crash
  • Post 9/11
  • The Crash of 2008

Most investors remember that last one very clearly, but we’ll explain what happened to the market and what it took to rebound.

Times like these are also a reminder that you need to have your plan in order. If another crash is coming soon, is your portfolio capable of minimizing losses? A plan with the proper allocations will protect you from the large swings in the market and keep you from worrying so much about whether your retirement is still on track.

Thankfully we’ve seen the market bounce back to begin March, but that doesn’t mean the losses are over. After the past decade of gains, there will be another correction eventually. History has shown us that. Will you be prepared?

[0:40] – Fun Fact of the Week: An average of 100 people choke to death on ballpoint pens each year. Will that be topped by the Coronavirus?

[1:40] – Quote of the Week: “You know you’re ready to retire when getting lucky means finding your car in the parking lot.”

[2:50] – History lesson: 158 years ago, the government issued its first paper currency – $5, $10 and $20 went into circulation.  

[4:45] – On to the main topic. What’s going on in the market today and how does it compare to past crashes?

[5:19] – Black Tuesday in 1929 led to the Great Depression.  

[6:46] – This one took 15 years to bounce back.

[7:51] – Black Monday in 1987. The Dow dropped 22.9% in a single day.

[9:15] – The Dot Com Crash

[11:22] – September 17, 2001 when the market opened back up for the first time after 9/11.  

[13:20] – We’re talking about this to give you perspective on the current market?

[14:14] – The crash of 2008

[16:17] – So when is the next one and is your plan prepared for it?

 

 

Final Thoughts:

“Big downturns will certainly happen again where maybe we have 20 or 30% in the course of 6-18 months. In fact, it’s almost guaranteed that that happens again because it’s been a historical fact. That’s how markets work.”  

– Joel Johnson, Money Wisdom Podcast

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