Last week I talked about some of the volatility that we’ve seen in the past, partially in reaction to an S&P comment that this is the most volatile market in 70 years. In researching this piece, I came across a truly frightening market: London in the mid-70’s.
The U.S. crisis in the ‘70s had nothing on its English counterpart. At the heart of the economic problems was a worker’s strike that left many residents of the City of London with power only 3 days a week. Workers had to read reports and work by candle light.
The market declined 70% during that time and saw 40% volatility. Of course, if you bought at the bottom and held on for 10 years, you got a fantastic 16% annual return. Amazingly, though, if you bought at the peak just before the crash, and held on for those same ten years, you got an 8% annual return. And if you consistently put money into the market every month, you got about 12%. Not bad.
The take-away from all this history is to remain calm and stay disciplined. Markets climb a wall of worry. Today’s bear market is tomorrow’s woulda-shoulda buying opportunity.
Douglas R. Tengdin, CFA
Chief Investment Officer
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