Lessons From a Wild Four-Year Ride In The Stock Market – The Average Joe
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    Lessons From a Wild Four-Year Ride In The Stock Market

    Noah Weidner

    March 16, 2024

    What do 1929, 1987, 2008, and 2020 have in common? They were all times when the stock market crashed, leading to some of America’s worst recessions, unemployment, and misery. Hard to believe, but it’s been four years since COVID caused the markets to collapse — which shut down the global economy. Looking back, it’s clear that it was one of the worst economic crises ever. But what’s remarkable is how quickly society has forgotten about it.

    Trip down memory lane: On Mar. 16, 2020, US stocks faced their second-worst day in history — with the Dow Jones, S&P 500, and Nasdaq Composite dropping over 12% as investors digested the impact of the coronavirus. And then, before investors even knew it, the COVID-19 stock market crash was over.

    • Between Feb. 14-Mar. 23, 2020, US stocks plummeted over 33% in just 24 trading days — marking the shortest and most volatile market crash in history.
    • The 128-year-old Dow Jones Industrial Average fell over 26% in just four days — its worst span in history, surpassing famous crashes in 1929 and 1987.

    Hindsight is 2020

    Amid the mayhem, it was challenging to see that the stock market bottomed about a month after the crash — and few would have predicted that stocks would hit an all-time high six months later. You didn’t need to be a super genius to make money; you only needed some patience and a little stimulus from Uncle Sam. Here’s what we’ve learned:

    • Timing the market is tough: The easiest way to buy the dip is to stick to a consistent investing plan, like dollar-cost averaging, that keeps you investing regularly regardless of market conditions.
    • History repeats itself: Despite the chaos of COVID, those who thought “this time is different” and swore the market wouldn’t rebound missed out on a generational buying opportunity.
    • Don’t panic sell: Fear, uncertainty, and doubt (FUD) are designed to make you sell, but those who panicked during the pandemic (or the subsequent bear market) likely missed out on the subsequent market boom.

    So, how’s it going now? The S&P 500 and the tech-heavy Nasdaq-100 are 51% and 81% above their Feb. 2020 all-time highs, which preceded the COVID-19 market crash, respectively. In other words, if you stayed invested through the past four years, you’d be sitting pretty. And if you didn’t, let it be a lesson for the next cycle.

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