I’ve been writing a lot about the worst one-day market declines in history lately. I guess that happens when three of the thirteen worst one-day declines happen in a week-long span.
When you string enough bad days together though, you build a broader trend. Our current trend feels a little bit like AHHH EVERYONE PANIC.
But, this isn’t the first time people have flipped out and it won’t be the last. I think it’s important to get a sense of history so we can compare the current level of freaking out so far with famous freak outs of the past. So, here is a greatest hits, so to speak, of all the worst stock market declines since 1896:
Now, the first thing that is definitely not reassuring is that little “TBD” in the bottom right just above my sweet little corner chart logo. Whenever the market is falling people always say, “hey, I don’t like pain and existential dread - so when is this going to end? Where is the bottom?” That “TBD” effectively means that no one has any clue. Maybe we already hit the bottom. Maybe there is more room to fall. If I knew I would be on a yacht and not writing a newsletter. Or, I would be on a yacht while writing a newsletter.
No one knows how bad things will get but we’ve had a lot of other bad times that were even worse than this. We don’t even have to go back in time very far to see one (i.e. the Financial Crisis). That drop was second only to the Great Depression!
Most importantly, we are here today looking back on the past. This means, the world never ended on those previous occasions. Even when stocks fell -89% in the Great Depression, the world continued.
We are looking back on some rough times, for sure. But even though we are in bad company, the world will continue. Let’s not forget that. Sometimes panic has a way of hiding that optimistic truth.