Despite Short-Term Setbacks, Markets are Resilient Over the Long Term

Markets can be volatile. Consider what happened in March 2020 over the global coronavirus outbreak. It only took 22 trading days for the S&P 500 to fall 30% from its February record high.¹

This downturn was the fastest decline in market history.

Often, we have found that these declines have reversed course naturally and, generally, rebounds have occurred more quickly than anticipated.

Consider some of the major negative events the U.S. has faced over the past four decades:

• Unemployment exceeded 10% in the early ’80s, which was the highest rate since the Great Depression.²
• On October 19th, 1987, the Dow Jones Industrial Average fell nearly 23% in a single day, i.e., Black Monday.
• The dot-com bubble burst in 2002 following excessive speculation in internet-related companies.
• The financial crisis of 2008, which many of us remember all too well, was the worst economic period since the Great Depression.

Each event caused stock prices to fall in the short term. However, every single negative event presented patient equity investors with long-term opportunity.

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Sources:
¹Morningstar.
²St. Louis Fed Research.