Coming up on March 9, we observe the sixth anniversary of the day The Apocalypse ended. It wasn’t a very fun Apocalypse. Most of them aren’t, I guess. But to the casual Apocalypse viewer, that 2008 Apocalypse felt just a little bit more Apocalypsy than all the previous Apocalypses. From October 2007 up until March 9, 2009, every major asset class fell, many of them by more than 50%. The S&P 500 Index had fallen a staggering 57%, and the doomsday purveyors told us no end was in sight. Credit markets were still frozen, countries were defaulting, centuries-old financial institutions were failing, the U.S economy was shedding half a million jobs a month, and a tax-and-spend liberal just got inaugurated as President.
Yes, the 2008 Apocalypse was the worst Apocalypse anyone under the age of 80 has ever seen, but today, six years later, it is as meaningful to capital markets as every other one, and by that I mean very little to not at all. From an investor’s standpoint however, that last, great Apocalypse held a very important meaning. To the investor who panicked and got out of the market after suffering most of the loss, then remained out for several years (or maybe is still out), the Apocalypse might have led to a delayed retirement, or the prospect of never retiring.
But to the disciplined investor, the Apocalypse represented a once-in-lifetime firesale to buy equities at discounts we may never see again. That’s just what we did for our clients during 2008 and 2009. And now with markets at historic highs, there’s a good chance your portfolio did just fine. Indeed, if March 9, 2009 marks any event, we can look at it this way: It was the day the last panicked investor fled the market. By March 10, buyers began to outnumber sellers, and the recovery began.
History tells us bear markets occur on average every five years. They don’t occur every five years, that’s just the average. Are we due for another? Who knows? What we do know is one is coming. One is always coming. The next one may be a mild one, or it may be the 2008 Apocalypse’s younger sibling. In either case, our strategy is the same: Stay the course, and the worse it gets, the more we will take advantage of falling prices. And we will once again be rewarded in the long run.