What We've Learned from 150 Years of Stock Market Crashes
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What We've Learned from 150 Years of Stock Market Crashes
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Re: What We've Learned from 150 Years of Stock Market Crashes
#2Subtitle:
> Though they varied in length and severity, the market always recovered and went on to new highs.
True. But that only works if the nation itself recovers and goes on to new highs.
Re: What We've Learned from 150 Years of Stock Market Crashes
#3Subtitle: > Though they varied in length and severity, the market always recovered and went on to new highs. True. But that only works if the nation itself recovers and goes on to new highs.
It's also only true until it isn't.
Re: What We've Learned from 150 Years of Stock Market Crashes
#4> Though they varied in length and severity, the market always recovered and went on to new highs.
Not in Japan it didn't. If you bought a Nikkei 225 index in December 1989, your returns are negative to this day (apart from a very brief breakeven in 2024): that's 35 years and counting of the market not recovering and going on to new highs. And Japan's experience is probably going to become the norm rather than the exception, now that everwhere else is catching up to it demographically.
"The market always goes up in the long run" was an adage for a world of steady population and productivity growth, which is not the world we have now.
Re: What We've Learned from 150 Years of Stock Market Crashes
#5A popular post that is often given to folks who are freaking out about drops in their portfolio:
* https://awealthofcommonsense.com/2014/02/worlds-worst-market...
And for those who want to sit on the sidelines, that's usually not a good idea:
* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
The main folks that do have to worry about their portfolio are those who are about to retire, and those that have just retired, but there are strategies for that (against sequence of return risk):
* https://www.kitces.com/blog/managing-portfolio-size-effect-w...
Re: What We've Learned from 150 Years of Stock Market Crashes
#6Hm, interesting article but I wish they had included global data as well. For example, stock market crashes in Japan and other countries. As I understand it, Japan still hasn't quite recovered from its crash more than 30 years ago.
Re: What We've Learned from 150 Years of Stock Market Crashes
#7People say not to time it but if you took your profits December ish you’re probably much happier than if you had lost everything since then and reset to 6-12m ago unless you’re playing the short. There is a premium on mental health and market volatility.
Re: What We've Learned from 150 Years of Stock Market Crashes
#8> Though they varied in length and severity, the market always recovered and went on to new highs. Not in Japan it didn't. If you bought a Nikkei 225 index in December 1989, your returns are negative to this day (apart from a very brief breakeven in 2024): that's 35 years and counting of the market not recovering and going on to new highs. And Japan's experience is probably going to become the norm rather than the ex…
> Not in Japan it didn't.
Only if you were 100% JP equities without any diversification: if you had some (20%?) bonds (and rebalanced), or had an international equities (and rebalanced), you were probably fine.
* https://www.bogleheads.org/blog/2017/02/06/a-short-study-of-...
* https://www.gocurrycracker.com/lessons-from-japans-lost-deca...
> Using Portfolio Charts withdrawal rates calculator, which uses data going back to 1970, a Japanese investor (experiencing Japanese inflation and spending Yen) with a 60% allocation to Japanese stock and 40% allocation to intermediate-term Treasuries had a 30 safe withdrawal rate of 3.2%.
* https://www.bogleheads.org/forum/viewtopic.php?t=306752
Even the (S&P 500) had ten years of zero returns, and the only thing that would given a US domestic investor positive results was a bond component (and rebalancing):
* https://www.forbes.com/sites/advisor/2010/09/13/its-not-real...
Re: What We've Learned from 150 Years of Stock Market Crashes
#9Subtitle: > Though they varied in length and severity, the market always recovered and went on to new highs. True. But that only works if the nation itself recovers and goes on to new highs.
Ya I think the past it felt as if the US was sharing in a global recession. This time it feels self inflicted and US Hegemony may be a thing of the past. If the dollar is no longer the world's reserve currency, I'm not sure how easily we'll be able to recover...
Re: What We've Learned from 150 Years of Stock Market Crashes
#10Hm, interesting article but I wish they had included global data as well. For example, stock market crashes in Japan and other countries. As I understand it, Japan still hasn't quite recovered from its crash more than 30 years ago.
Mostly because of the restrictive Plaza accord[1] and tariffs[2].
[1] https://en.m.wikipedia.org/wiki/Plaza_Accord
[2] https://edition.cnn.com/2019/05/24/business/us-china-trade-w...