The Crisis Chronicles: How Stocks Won the Battle of Nerves
The stock market is a dynamic entity, subject to the ebb and flow of various events and crises that span the globe. News headlines and banners from the largest news outlets to the smallest Youtuber discuss the events of the day and how to react to the latest news that is sure to change the markets.
As a long-term investor, it is important to cut through the turmoil and emotional rollercoaster and look at the historic context of crisis events. From political upheavals to economic recessions, geopolitical tensions to natural disasters, the market has weathered an array of challenges since 1970 (and even beyond that). Despite the turbulence caused by these events, the market has displayed remarkable resilience, consistently bouncing back and delivering substantial returns to investors over the long run.
The chart below represents the total growth of the S&P 500 since 1970 if you had invested $10,000. That $10,000 investment by the end of 2023 would have grown to be almost $2,400,000!
While there are clearly ups and downs, the overall trendline of the market has been remarkably stable.
Consider the graph once again, this time overlaying it with the headlines that shaped history. Looking back, these headlines were often unsettling—wars, shifts away from the gold standard, Black Monday, the Tech Bubble, currency fluctuations, and other notable events.
Amidst geopolitical upheavals, financial turmoil, and technological breakthroughs, businesses endured by embracing change, fostering flexibility, and fortifying their resilience strategies. Their capacity to pivot, integrate novel technologies, and swiftly respond to obstacles not only ensured survival but also propelled them to thrive in an ever-evolving environment. This adaptability underscored the role of businesses and business owners as dynamic entities adept at navigating uncertainties while fueling economic growth and advancement.
Predicting the future remains an enigma. Undoubtedly, there will be more moments of crisis and attention-grabbing “Breaking News!!” However, as an investor, maintaining a disciplined investment strategy and keeping a long-term perspective are crucial in navigating the unknowns of tomorrow.
