From October 2007 to March 2009, the US share market, represented by the S&P500, plummeted by a heart-stopping 57%. This was the most severe market downturn since the Great Depression of the 1930s.
However, by February 2013, the S&P500 didn’t just recover—it soared past its previous peak. And if you had reinvested dividends during this period, you would have broken even sooner!
So, how could someone possibly lose money during this 5-year and 4-month journey from the market’s peak in 2007 to full recovery? The answer is as simple as it is tragic: by misinterpreting a temporary decline as a permanent loss, panicking, and selling out.
The market, you see, didn’t create the loss. People did. And it’s a pattern I’ve seen replayed repeatedly in my financial planning career.
Let’s learn from history: invest with a long-term perspective, stay patient during the storms, and trust in the resilience of the markets. Because it’s not the markets that create the losses — it’s our own decisions.