10 Years After the 2007–08 Financial Meltdown, Some Facts to Consider

We are approaching the 10-year anniversary of the 2007–2008 global financial crisis, which imploded in September and October of 2008 but had peaked in July–November 2007. In contrast, we have been enjoying a period of remarkably low volatility. In light of this, consider these “Fun Facts To Know and Tell”: Using the S&P 500 as a stock market benchmark, since it has a long history (although, remember, we like to use the MSCI ACWI as a broader U.S. and global stock index):

The last 3% drop in the S&P 500 was 199 days ago:

  • Longest stretch since 1995–96
  • Second-longest stretch since 1950

The last 5% drop was June 2016, or about 15 months ago, when Britain surprisingly voted to exit the European Union.

The last 10% drop was January and February 2016, over 18 months ago.

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By comparison, since 1950 the S&P 500 has declined 3% or more over four times per year, on average, and dropped over 5% about 2.5 times per year.

Our crystal ball is no clearer than yours, and we are not predicting an imminent downturn in the stock market. Stock market downturns can come any time, without warning, and are a challenging part of the investing process. Be ready at all times!

Much has been written about the success of passive, or index, investing, a strategy we have recommended for well over 15 years. As with many things, relative success can run in cycles. Index investing has been extremely successful in recent years, but there have been times, such as the early 1980s, mid-1990s, and late 2000s, when traditional active management fared better.

In investment management, no single strategy works all of the time, so investors should make judgments over reasonable time periods, understand the facts, and be patient. We continue to recommend passive investing for many reasons, but we also recognize that it won’t excel all of the time.

We hope you have logged on to your “My Wealth” database to review your investment portfolio. We plan to update the monthly performance numbers on the second business day of the month, so the data will be very timely. Please contact us with any questions.

We appreciate the opportunity to serve you and look forward to a great future.

As always, please contact us with any questions, news, or comments.