Last week I met with a new prospective client. He's in his mid-50's and feels like it's time for him to retire. He had run the numbers and, I agreed, seemed to be...
This Saturday marks the 20th anniversary of one of the most tragic events in American history. 2,977 innocent lives lost, 25,000 people injured and over $10 billion in property damage.
I was in New York a couple of weeks ago and got to do one of my favorite activities...riding the Staten Island Ferry. It was a beautiful day, and we had a clear view of the new One World Trade Center, built to replace the two towers lost in the attacks. I couldn't help but think how recent the attacks still felt, despite the passage of two decades.
Twenty years. Has it really been that long?
Where were you 20 years ago? What was your reaction when the enormity of what had happened became clear? Could you have predicted back then how the world would look today?
The stock exchanges remained closed until September 17th. Upon opening, the Dow dropped steeply and finished the day down more than 7%, including its largest single day point drop ever. By the end of the week the Dow had fallen 14% to 8,235, wiping out $1.4 trillion in market value. It would take the stock market 5 years to recover to the previous highs reached in May 2001.
To say that the stock market faced some challenges was an understatement. This would be the first and only time in the history of the stock market that the market declined in three straight years (2000, 2001, 2002). The global economy contracted as economic confidence was shattered, and the United States entered into a 20-year war in the Middle East seeking justice for the terrorist attacks. It was not inaccurate to say things felt very different this time.
Since that day:
- We've had 4 Presidents
- We've had 5 bear markets, two of which (2009 and 2020) were among the worst in market history
- The iPod, iPhone and iPad were invented
- Euro currency was introduced
- Space Shuttle Columbia crashed
- Facebook, Twitter, Spotify, YouTube, Instagram and Bitcoin were all created (Heaven help us all)
- Indonesian earthquake and tsunami killed 230,000 people
- Hurricane Katrina devastated New Orleans, killing 1,836 people
- Saddam Hussein and Osama Bin Laden were both killed
- Housing market collapse and Great Recession triggered a 57% drop in the stock market
- Greece, Spain, Portugal and Italy nearly went bankrupt
- Swine Flu swept the world
- Earthquake in Haiti killed 230,000 people
- Largest oil spill in US history occurred in Gulf of Mexico
- Russia invaded the Ukraine
- ISIS established a temporary caliphate across portions of the Middle East
- The UK left the European Union ("Brexit")
- COVID-19 pandemic spread across the globe, killing millions and shattering economies everywhere
So, here we are. 20 years later, despite all that has transpired, the Dow closed today at 35,031 a more than four-fold increase since September 2001. With dividends reinvested, the index has returned more than 9% per year, just under it's historical average of 10%. If you hadn't lived through all of it, you might be tempted to think the market just did its normal historical thing.
Think about that for a minute. Could you have made that prediction in the literal ashes of the 9/11 attacks? Understandably it was difficult to imagine a bright future back then.
My favorite investing phrase is "It's NEVER different this time". It's even the fifth pillar of our Power of 5 Investing® philosophy. It is also the most important of the five pillars. Why? Because it is when things look darkest that we must have the courage to stick to our beliefs and not abandon well-developed plans. It means having an unyielding belief in the power of people to overcome whatever obstacles stand in our way. It means confidently marching forward, knowing that tomorrow will be better.
This will be a difficult anniversary for many. But we'll get through, just like we always do. Please take time this weekend to honor those we lost, to focus on what truly matters, hug those you love and give thanks that you live in such an amazing time.
Erik Christman, Managing Partner