Assessing the Crash 10 Years Later
Mr. Batnick’s chart that begins in March 2009, ends in March of 2017 (Thornburg extended to August of 2018), illustrates that the “stay the course” message we were begging our clients to hear was exactly the direction they needed to take. But for many clients, “staying the course” as they saw $10.2 trillion in wealth disappear during 2008, required them to have too much faith, to believe too strongly that, as we’d seen in the past, the economy would recover and the market would go on to reach historic levels in the future, just as it has.
But, investors can’t be blamed for being afraid. The road to recovery hasn’t been a smooth one. Between March of 2009 and August of this year we experienced many financial challenges, political problems, and natural and human-created disasters that have caused the market and investors to swoon. Yet, despite these challenges, those investors who remained invested have been generously rewarded as the Dow Jones Industrial Average slowly climbed from a March 6, 2009, low of 6,443 to its close on August 31 of 25,986, an increase of 403%.
So, why is the history of the last 10 years important today? Because, as has been the case since the New York Stock Exchange opened for business in 1817, we will have economic booms and economic busts; the market will go up and the market will go down, but over the long-term, the trend of the market is up. That truth leads us to the most fundamental aspect of your job – keeping your clients invested through up and down markets because time and again history has demonstrated that the investors who win are the investors who “stay the course” and the investors who stay the course are the ones who work with a financial advisor.
It doesn’t matter that at some point the economy will fall into a recession and the bull market will turn bearish. It doesn’t matter if the energy sector or Chinese real estate fuels the downturn. What matters most is keeping your clients invested during the tough times so they can reap the rewards when the economy and stock market ultimately recover.