When most investors think about risk, they immediately go to the big crashes:
📉 1929 (Great Depression)
📉 1974 (Energy Crisis)
📉 1987 (Black Monday)
📉 2000 (Dot-Com Bust)
📉 2008 (Financial Crisis)
📉 2020 (Pandemic Crash)
These were all moments of fear, panic and catastrophic losses for those who sold at the bottom.
But here’s the reality — risk isn’t just about the big, scary events. It’s always there, even if you don’t feel it.
Since the March 2009 low made 16 years ago, the S&P 500 has gained over 1,000%. If you just looked at this chart, it seems like a straight ride up:
But any investor who lived through the last 16 years knows that’s not true.
Since that 2009 bottom, we’ve had:
- 30 corrections of more than 5%.
- 10 corrections over 10%.
- 4 corrections over 20%.
- 1 drop of more than 30%.
Each time, it felt like the world was ending.
Take April to July 2010. In two months, the market dropped 21% because of the European debt crisis, recession fears and the U.S. debt downgrade.
Investors were still shaken from 2008, bracing for another crash. Instead, the market recovered and kept climbing.
Take a look at all the reasons for the past 30 or so corrections here:
Right now, the latest fears are tariffs, trade wars and recession worries. The S&P 500 is down about 11% in 22 days.
If you’re feeling nervous, you’re not alone.
Market Pullbacks Feel Different — But They’re Always the Same
Every time the market pulls back, it feels different.
But the truth is, it’s always the same: investors panic, headlines scream doom, and then the market recovers and moves higher.
Rinse and repeat.
Before investing, most people say they can handle a 20% decline — no problem.
But when it actually happens, and real money is on the line, that’s when the real test begins.
In hindsight, it’s tempting to think you could’ve sidestepped the big declines and captured only the upside (my mother-in-law used to think she was able to do that).
But no one — not a single person — has proven they can do this consistently over time.
That’s why these declines aren’t something to fear. They’re the price of admission for long-term investors.
Thought leader and author Morgan Housel joked that if he wrote a book on investing, it would be titled “Shut Up and Wait.”
And every page would be the same chart: a 150-year chart of the stock market — where $1 turned into over $100,000.
Source: Morgan Housel
And here’s a reminder from Warren Buffett on short-term stock predictions:
“You can’t predict what stocks will do in the short term, but you can predict that businesses will do well over time. Just take the 20th century—the Dow Jones went from 66 points to 11,497 points, and you had two World Wars, a Great Depression, flu epidemics… American businesses will do fine over time. The only person that can cause you to get a bad result in stocks is yourself.”
Today, the Dow is over 42,000. That’s nearly 4X higher since the start of the 21st century.
The takeaway?
Stop worrying about short-term fluctuations. Use them to your advantage.
When great companies go on sale, you buy them. Then you sit on your butt and wait.
That’s how wealth is built.
Do you have a great business on your shopping list that went on sale this week? Are you going to buy?
I’d love to hear your thoughts. Send me a quick email here at Insider@ProsperityResearch.com.
Regards,
Charles Mizrahi
Founder, Alpha Investor
