Investing in the US share markets feeling like a white knuckle ride lately? Maybe it's time to ditch the magnifying glass and zoom out. Sure, the ‘Great Crypto Grift’ may be unravelling. But volatility and bear markets in the US share markets is business as usual. Just like investing in crypto, investing in the share markets can trade on emotions, with people buying when shares are high, and selling when they’re low. But unlike the unregulated, mood-swinging teenaged crypto markets, investing in the share markets is owning a slice of real companies, along with their assets, people, products and services. Time for a short walk down memory lane? 🚶♀️
From boom to bust, the Roaring Twenties ended with a bang in October 1929. The bottom fell out of the share markets following a decade of 250% highs fuelled by mum and dad investors borrowing to buy shares. By July 1932, the US share markets closed down 89% from its previous highest peak in September 1929. Dance forward 40 years to the era of summer love, and doing more than a disco dip were the share markets, which were tripping. Hemlines dropped from mini to midi and share markets followed suit, plunging 48.2%. 🕺 By the 1980s, as hair got more air, the only thing not jazzercising were the share markets, dropping 27% between July 1981 and November 1982.
Oops, we did it again… While Y2K didn’t take down civilisation, in March 2000 the dotcom bubble burst and the markets tumbled 36%. 🎈 Roll onto 2008, and the markets fell faster than Britney’s freedom, dropping sharply, at nearly 52% between October 2007 and November. More than a decade later, following the ‘short-lived’ Coronavirus Crash of 2020 when markets fell nearly 34%, investors experienced an investing ‘bonanza’, which today has fallen back to ground, around 21%, with the S&P 500 index today sitting higher than pre-pandemic levels.
So… lessons learned from 100 years of the share markets? Get familiar with your risk tolerance, don’t mix emotions with markets, plan for when you need to access investments, and step back and take in the whole NFT, not just a few pixels. 🖼️