Reflecting on the Historical and Financial Lessons of 9/11
On the morning of September 11, 2001, I was driving on Southwest Trafficway, heading to my office on the Country Club Plaza in Kansas City. When I walked inside the world had changed. My colleagues were huddled around TVs watching the horrific, surreal footage from the terrorist attacks in New York.
About a month later I was in New York for business meetings and I saw the destruction first-hand. Everyone was wearing facemasks because the air was still heavy with soot. At Ground Zero, some parts of the remaining tower structures were still burning from the intense heat.
You could feel the grief and the fear. But there was also a remarkable sense of resilience. People were pulling together, helping each other, doing their part. And, little by little, the city, the country – and, yes, the markets -- began to recover.
On today's show, my cohosts and I discuss our memories of that terrible day before zooming out for an analysis of how major historical events can affect the global economy and individual investors.
It's OK to worry about your money ...
In the aftermath of a tragedy, it can feel wrong when our minds drift from compassion for those directly affected to concern about our own situations. But, on some level, that's just how emotions like fear, confusion, and anger work. We process what's happening on the big picture, and then our concern narrows to our own communities, homes, and loved ones.
After the second plane hit the towers on 9/11, the New York Stock Exchange and NASDAQ did not open. Undoubtedly, that was more a safety issue than a financial one, but as the markets stayed closed for the next 6 days, many nervous investors began to fear the worst. And, on September 17th, when the markets reopened, the Dow Jones Industrial Average was down over 14% and the S&P 500 was down just over 11%.
9/11 rightfully looms so large that many folks forget it was also sandwiched between two other economic calamities: the 2000 bursting of the dot-com bubble, and the Enron scandal, which broke about a month later in October 2001.
Of course, the NYSE has closed many times in its long history, including after the outbreak of World War I and after JFK's assassination. But this was truly one of those times when things felt different. Many folks were worried that 9/11 would be just the first wave of terrorist attacks. And a military response by the U.S. and our allies seemed inevitable.
Those of us who lived through 9/11 faced similar, wide-ranging fears when COVID-19 broke out at the beginning of 2020. Once again, no one knew what was going to happen next. And, once again, the markets reacted to that uncertainty with volatility. By mid-March, the Dow was down 20% and the S&P 500 was down almost 34%.
... as long as you keep the right perspective.
As wildly different as the circumstances were, the stories of 9/11 and COVID-19 are remarkably similar from a market history perspective: a drop followed by rapid recovery.
Just six months after 9/11, the markets had regained their losses and were up almost 25%.
And in August of 2020, the markets regained their pre-COVID losses and hit all-time highs.
We've endured some challenging financial situations since then, including the war in Ukraine and our recent bouts of high inflation. I understand how scary these market ripples can feel, especially for seniors who are retired or preparing to retire. But folks who are following the kinds of comprehensive financial plans we design at Keen Wealth almost always have options to weather the storm. In many cases, a good financial plan can even create opportunities during a downturn that a professional advisor can use to help folks improve their long-term outcomes.
In fact, financially, the folks I worry about the most when the news is bad are those who don't have a plan at all, and who aren't working with an advisor who can help them keep the latest market moves in perspective. These are usually the folks who are likely to overreact to market volatility and make emotional decisions with their money at the worst possible moments.
For example, on September 10th, 2001, the Dow was around 9,600. As I write this, it's above 40,000. I truly feel for the many, many folks who panicked in the fall of 2001, "got out while they still could," and, even with a few more downturns along the way, missed out on 20-plus years of investment growth.
At Keen Wealth, we don’t want that story to be yours. I understand that there are events that occur over time that can certainly create anxiety and concern. But before you make any money moves that you might not be able to recover from, please come talk to one of our advisors. The perspective and expertise that we have to share could help you see the markets in a much more productive light and make better plans for your future.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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