It was 20 years ago when the stock market had the largest one day drop in its history.
Known as "Black Monday," the Dow Jones Industrial Average dropped 22.
6%, losing 508 points from its opening that day of 2246.
(1)The year 2000 starteda painful three-year decline that had many concerned with their shriveling 401(k) retirement saving -- thedot-com bust and terrorist attacks on September 11, 2001 were tough on investors.
Of course, the markets bounced back after "Black Monday" and again after the three-year bear market and now trades around 13,000.
Will such downturns happen again?The answer is most likely, yes.
Stocks can be volatile and the downturns seem to capture more focus than the upturns.
Each of these events created downturns in the market but were followed by upturns shortly thereafter(1): o Sept.
11, 2001 - Dow lost 7.
7% when it reopened Sept.
17.
Six months later it was up 10.
47% o The day President Kennedy was shot -- Dow fell 3%.
Six months later, it had rebounded by 15.
37% o Similar downturns followed by upturns in the Dow also happened following the Cuban missile crisis, the North Korean invasion of South Korea in 1950, and the Japanese attack on Pearl Harbor.
Many investors who have invested in the stock market for the long term are enjoying increases similar to the DOW average, which increased from its 2246 average 20 years ago(1) to the 13,000 average it boasts today.
The market may be more resilient today than ever.
Manage risk through diversification.
Invest in different market segments -- when stocks fall, some will lose less than others, and others will recover more quickly.
Another way to diversify your portfolio is to invest a portion in the international market, which tends to move in different cycles than the domestic market.
Although the stock market can be unpredictable, it has rewarded long term investors.
The important thing is to not panic and bail out when the going gets rough.
Hopefully, the lesson we have learned from the past is that patience and persistence pays off.
Do not allow emotion to guide your investment decisions.
Have a plan -- a professional can suggest a portfolio structured to perform well throughout all market cycles.
(1)FMR Corporation Securities offered through Summit Brokerage Services, Inc.
, Member FINRA and SIPC.
Known as "Black Monday," the Dow Jones Industrial Average dropped 22.
6%, losing 508 points from its opening that day of 2246.
(1)The year 2000 starteda painful three-year decline that had many concerned with their shriveling 401(k) retirement saving -- thedot-com bust and terrorist attacks on September 11, 2001 were tough on investors.
Of course, the markets bounced back after "Black Monday" and again after the three-year bear market and now trades around 13,000.
Will such downturns happen again?The answer is most likely, yes.
Stocks can be volatile and the downturns seem to capture more focus than the upturns.
Each of these events created downturns in the market but were followed by upturns shortly thereafter(1): o Sept.
11, 2001 - Dow lost 7.
7% when it reopened Sept.
17.
Six months later it was up 10.
47% o The day President Kennedy was shot -- Dow fell 3%.
Six months later, it had rebounded by 15.
37% o Similar downturns followed by upturns in the Dow also happened following the Cuban missile crisis, the North Korean invasion of South Korea in 1950, and the Japanese attack on Pearl Harbor.
Many investors who have invested in the stock market for the long term are enjoying increases similar to the DOW average, which increased from its 2246 average 20 years ago(1) to the 13,000 average it boasts today.
The market may be more resilient today than ever.
Manage risk through diversification.
Invest in different market segments -- when stocks fall, some will lose less than others, and others will recover more quickly.
Another way to diversify your portfolio is to invest a portion in the international market, which tends to move in different cycles than the domestic market.
Although the stock market can be unpredictable, it has rewarded long term investors.
The important thing is to not panic and bail out when the going gets rough.
Hopefully, the lesson we have learned from the past is that patience and persistence pays off.
Do not allow emotion to guide your investment decisions.
Have a plan -- a professional can suggest a portfolio structured to perform well throughout all market cycles.
(1)FMR Corporation Securities offered through Summit Brokerage Services, Inc.
, Member FINRA and SIPC.
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