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The Business Forum
Crises and the Stock Market: Coping With Uncertainty
fear, grief, anger — these feelings were
common after the horrific events that
shook our nation on September 11, 2001.
Just as humans experienced waves of
emotions, the stock market experienced
waves of volatility. However, it’s
important to remember that America has
surmounted crises before. Examining how
some past global problems have affected
the U.S. stock market may help you
better grapple with the economic and
investment uncertainties of crisis
It may reassure you to know that the
stock market has historically rewarded
those who stayed the course during
tumultuous times, although past
performance cannot guarantee future
results. For instance, the first trading
day after the Cuban Missile Crisis
(October 23, 1962), the S&P 500 fell
3.78%. Yet only six months later, it had
surged 24.66%. More recently, over the
one-month period after Iraq invaded
Kuwait — a move that eventually led to
the first Gulf War — the S&P 500
declined 9.12%. One year later, the
index had jumped 10.16%.*
market’s rebound has been slower in
coming. For instance, after the bombing
of Pearl Harbor, the S&P 500 experienced
an initial drop, rose slightly after one
month and then found itself lower six
months after the attack. But by VJ Day,
less than four years later in August
1945, the S&P 500 had rebounded 57%.*
course, economic developments take time
to play out and markets often remain
highly volatile in the immediate wake of
a world crises. Aside from keeping
history in mind, how might you cope in
our ever changing world? Consider these
on your long-term financial plan rather
than short-term market dips.
realistic, but not fatalistic, about
current market conditions and returns.
Investors prepared for occasional
declines will be less likely to fall
prey to panic selling.
your portfolio well diversified to help
to know your finances better and review
how different accounts — such as IRAs
and employer-sponsored retirement plans
— are invested.
your portfolio and make sure that your
risk tolerance meshes with your
financial goals and time horizon.
with a qualified financial advisor
before making changes to your portfolio.
He or she can help temper emotional
while our nation has faced crises
before, the economy and the stock market
have recovered, in time, stronger than
performance is no guarantee of future
Brian M. Clay
is a Fellow of
The Business Forum Institute and the President of Clay, Malek &
Northam Wealth Management in Southern California; whose clients
include both companies and individuals. He has been recognized for
numerous honors and accomplishments including being named to the
Consumer Research Council of America's "Best Financial Planner"
list. Brian's professional registrations include the Series 6, 7,
24, 63, 66 held with LPL Financial, and CA Life & Health Insurance.
He also holds the Chartered Mutual Fund Counselor (CMFC) and
CERTIFIED FINANCIAL PLANNER™ (CFP®) designations. The CFP®
designation is considered by most to be the highest certification in
the industry. To be recognized as a CERTIFIED FINANCIAL PLANNER™,
individuals must meet rigorous experience and ethical requirements,
complete financial planning coursework, and pass a certification
examination covering the financial planning process, risk
management, investments, tax planning and management, retirement and
employee benefits, and estate planning. They must also meet ongoing
continuing education requirements and uphold the CFP® Board Code of
Ethics and Professional Responsibility. Brian is an LPL Registered
Principal. Securities and Financial Planning Services offered
through LPL Financial, A Registered Investment Advisor – Member FINRA/SIPC. For a list of states in which he is licensed to do
business, please visit
Brian holds a Bachelors degree in Economics from the University of
California, Los Angeles (UCLA).
Brian's Web Site
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