| History
in Perspective - After the Storm
By IndexFunds.com Staff
October 12, 2001 |
|
The stock market has recovered the more than $1 trillion in lost
market cap value it had lost since the September 11th attacks.
Despite the encouraging rally, many investors are understandably
shaken by the terrorist attacks and a future clouded with uncertainty
and new risks. A long list of fallen, television images of exploding
bombs and violent protests, and the unimaginable threat of weapons
of mass destruction on our own soil loom in every headline.
In times like these, we tend to look back on history to gain
perspective and, if possible, learn from the mistakes of the past.
And history tells us that America can bounce back after devastating
losses and new challenges, and that panic selling never works.
So as we close another quarter that has seen equity indexes plummet,
let's take a look at our past and see if we can find something
to be optimistic about.
The chart below marks several of the darker moments in our nation's
history and how the Dow
Jones Industrial Average reacted the next day, a half year
later, and a year later. What we see gives us hope for the near
future anyway.
The Dow Jones Industrial Average Reacts to
Dark Days in History
| Crisis |
Date |
Following Trading
Day |
6-Months Later |
1-Year Later |
| Pearl
Harbor |
12/07/41 |
-3.50% |
-9.48% |
-1.37% |
| Korean
War |
06/26/50 |
-0.79% |
7.36% |
15.13% |
| Sputnik
Launched |
10/04/57 |
-0.88% |
-5.44% |
14.58% |
| Cuban
Missile Crisis |
10/22/62 |
-1.85% |
25.05% |
31.41% |
| Kennedy
Assassination |
11/22/63 |
-2.89% |
12.04% |
21.58% |
| Gulf of Tonkin Attack |
08/04/64 |
-0.90% |
7.58% |
5.18% |
| Vietnam
Conflict |
02/26/65 |
-0.41% |
-0.81% |
5.48% |
| Nixon
Resigns |
08/08/74 |
-1.59% |
-10.74% |
2.53% |
| Reagan
Shot |
03/30/81 |
-0.26% |
-14.56% |
-17.12% |
| Hostages
in Grenada |
10/25/83 |
-0.69% |
-7.10% |
-3.31% |
| Kuwait
Invasion |
08/02/90 |
-1.20% |
-5.81% |
3.69% |
| WTC
Terrorist Attack |
09/11/01 |
-7.12% |
- |
- |
Source: Dow Jones Indexes, special
thanks to Karishma Thakkar
Of course, some folks will say that we're involved in a new war
with different rules that make the old comparisons obsolete. But
if you look at the events on the list, Americans living in each
period would say they were facing a new challenge that defied
previous example. The only thing we can know for certain is that
the next challenge will be different, because it always is.
