First quarter investment statements are going to look…. volatile. As you open your statement, you’ll be coming off your 2021 “High” remembering record returns. Your eyes focus on the 3/31/2022 value…. But turn the page! Look a little further into your statement.
If you are adding to it monthly, look at your March contribution share price. Then look at how many shares you purchased. Then look at January’s share price and shares purchased. If you can…. pull up last year, Year End statement and look at October, or November.
You. Are. Building. Wealth.
Your monthly habits are not timing the market. And when the market is down, you are buying MORE. These volatile times are when your accounts will build value and when the market values come back, you will be so proud of yourself.
The 2001 market downturn lasted almost two years:
The 2001 recession lasted eight months, from March to November. It was caused by a boom and subsequent bust in the dot-com businesses. The Y2K scare had partially created the boom in 2000. Companies bought billions of dollars’ worth of new software, because they were afraid the old systems weren’t designed to transition from the 1900s to the 2000s. Many dot-com businesses were significantly overvalued and failed.
The 9/11 attack worsened the recession. The economy contracted in two quarters: Q1 by -1.1% and Q3 by -1.7% Unemployment continued rising until it peaked at 6.3% in June 2003. (Thebalance.com “History of Recessions”)
The 2008 market downturn lasted 13-18 months:
The Great Recession lasted from December 2007 to June 2009, the longest contraction since the Great Depression. The subprime mortgage crisis triggered a global bank credit crisis in 2007. By 2008, the damage had spread to the general economy through the widespread use of derivatives.
The unemployment rate rose to 10% in October 2009. The recession ended in Q3 2009, when GDP turned positive, thanks to an economic stimulus package. (Thebalance.com “History of Recessions”)
The 2020 market downturn lasted 5 months:
The 2020 recession was the worst since the Great Depression! The U.S. economy contracted a record 31.4% in the second quarter after falling 5% in the previous quarter.1
In April 2020, the U.S. economy lost an astonishing 20.8 million jobs, sending the unemployment rate skyrocketing to 14.7%. It remained in the double digits until August. Uncertainty over the pandemic’s impact also caused the 2020 stock market crash. But boy did it rebound!!
The Federal Reserve lowered the fed funds rate to 0%, promising to keep it there until 2023. Congress issued $3.8 trillion in aid. Although the economy grew 33.1% in the third quarter. (Thebalance.com “History of Recessions”)
Stay the course.
Be the positive force for those around you.
Remind others how volatile times build wealth!
Kerry Schepers, ChFC
Ohnward Wealth and Retirement