“The farther backward you can look, the farther forward you can see.”

Winston Churchill

Next month will mark my 40^th year in the financial advice business. I thought this might be a good opportunity to share some insights gained from four decades of counseling clients, including what I’ve learned about markets and human nature.  In the interest of brevity, I’ll focus on what the last 25 years have taught us all about serious investing.

Since the year 2000, markets have witnessed seven legitimate panic-inducing events. If you’re like most people, you’ll have trouble recalling them all. Not to worry, I’ll summarize them here.  While you may find the memories a little unsettling, keep reading, I promise we’ll get to the good stuff.

Panic #1: The Implosion of the Dot-Com Bubble

The dot-com bubble represented the greatest speculative period in our memory.  The internet promised to revolutionize the world (just like railroads, radio, aviation, and television did), and everyone bought in. Companies with no revenue and funny names were driven to atmospheric prices. Its implosion triggered a liquidation of stock holdings by panicked investors that would not end for 2 ½ years. Add on September 11^th, 2001, and the subsequent bankruptcies of Enron (then the 7^th largest company in the S&P 500), WorldCom, and Tyco, and you have a recipe for existential disaster. The S&P 500 bottomed in October 2002 and was down 49% from its peak in 929 days.

Panic #2: The Global Financial Crisis

If the dot-com disaster was the greatest stock market mania in US history, then subprime mortgages and complex derivatives certainly created the largest debt bubble in world history. As it unraveled, major financial institutions around the globe fell like dominoes. The global credit system seized up and shut down. Scary stuff, indeed. The US entered an 18-month recession, and unemployment reached 10%. The S&P 500 bottomed in March of 2009, down more than 50% from its peak over 517 days. This was the worst decline since the Great Depression.

Panic #3: The European Debt Crisis

This 2011 panic isn’t easy to recall for most, but Europe’s sovereign debt crisis rattled world markets. Greece had to be bailed out (with Italy and Spain barely avoiding insolvency), and it was widely believed the Euro wouldn’t survive. In the US, political brinksmanship over the debt ceiling stoked fears of a government shutdown. Members of Congress seemed prepared to force a default. Standard and Poor’s, a credit rating agency, stripped US sovereign debt of its AAA rating. In October, the S&P 500 declined by 19% from its highs in 157 days.

Panic #4: The Christmas Eve Massacre

The fall of 2018 brought a perfect storm to US stocks. President Trump’s trade war with China (sound familiar?) threatened a global slowdown at the same time the Federal Reserve was raising interest rates. The standoff between the President and Congress over his demand to fund a border wall resulted in a 35-day government shutdown, the longest in history. The S&P 500 bottomed on December 24^th, down nearly 20% from its highs in 95 days.

Panic #5: COVID

By the third week of February 2020, the pandemic, with its unknown and terrifying prospects, had shut down the global economy. Financial, social, and economic chaos ensued. The stock market lost a third of its value in just a few weeks. From February to April, the US economy contracted by 19%. Thankfully, Congress and the Federal Reserve flooded the markets with liquidity, resulting in a meteoric recovery. The S&P 500 reached its panic low on March 23^rd, down 34% in 33 days.

Panic #6: Inflation Spikes and Historic Fed Tightening

Inflation, after a 40-year slumber, exploded in early 2022. Trillions of dollars pumped into the economy to fight the COVID slump came home to roost.  As inflation soared to more than 9% in June, the Fed raised interest rates from zero to 5.5% in 16 months – the fastest increase in its history. Recession fears were rampant. Stocks and bonds cratered. 2022 turned out to be the worst year for diversified investors since 1937. The S&P 500 bottomed in October, down more than 25% from its peak in 282 days.

Panic #7: The Tariff Tragedy of 2025

The President’s April 2^nd, “Liberation Day” tariff announcement set off one of the all-time great panic episodes. Fears about how severe the tariffs might actually be drove a swift and painful downward spiral. (The subsequent postponement of tariff deadlines resulted in an almost instantaneous recovery of markets to new highs, but we’ll get to that.) The S&P 500 peaked on February 19^th and bottomed on April 8^th, down more than 18% in 48 days. 

Whew. Sounds like a terrible ride, doesn’t it? Read on…

On March 31, 2000 – about the time the great dot-com panic got rolling, the S&P 500 closed at 1,487. Remember that number.

As of this writing, the S&P 500 stands at 6,204.

Anyone who invested in the 500 largest, most well-run companies in the world in March 2000, just before the dot-com meltdown, has averaged about 7.7% annual returns on their U.S. stock investments.  This assumes, of course, that they just looked out the window and didn’t panic when the world almost came to an end. Seven times.

“But”, you say, “how can that possibly be given all this carnage that’s gone on?”

To answer this question, I humbly offer the following timeless truths, all of which can be found in my first book, “What Great Investors Know”, published in 2004:

 1. The future short-term direction of things is fundamentally unknowable.

No one can predict where and when the next world-ending crisis will occur. We can only say that we’re sure there will be others. But like every crisis before it, it will run its course and pass. 100% of them have. This is a historically true statement.

 2. All downward fluctuations in market values are temporary.

For as long as you’ve been alive, markets have not only recovered from declines, but they have marched on to new highs. Every. Single. Time. The price you pay for the permanent advances is the temporary decline. If you remember nothing else, remember this: Declines are an opportunity to invest more capital for the inevitable advance. History is your friend here.

 3. “It’s different this time” are the four most dangerous words any investor can utter.

It’s never different, it just feels that way. The next apocalypse du jour will – just like all the others – come out of nowhere, send markets (and emotions) into a tailspin, and then die off as markets begin their inevitable march northward.

 4. The world is always ending; it just never ends.

You can thank financial journalism and the media for inducing panic and ruining the futures of thousands of unguided investors every time a storm cloud appears. If you want rational dialogue and perspective, follow your advisor, not the talking heads on television who get paid to attract eyeballs. They have no interest in or attachment to the achievement of your goals and dreams. Your advisor does.

 5. Work your plan.

Serious investors are investing in what will ultimately happen over the balance of their investing lifetime. (Gamblers, by contrast, are speculating what they think will happen next. Don’t do that – see #1.) The most powerful defense you can have is a long-term plan that aligns with your ultimate goals and a portfolio that matches your emotional resilience to the inevitable fluctuations. Then, let the portfolio work.

In forty years of guiding clients through these markets, I’ve learned that the most successful ones have three valuable attributes that keep them grounded during difficult and challenging times:

• Faith in the future: If you don’t have any, there’s nothing anyone can do for you.
• Patience: I don’t know how long it will take for the next crisis to pass, but I know it will.
• Discipline: It’s natural to feel uncomfortable in times of uncertainty but feeling it and acting on it are two different things.

In conclusion, there is no secret to successful investing. To accomplish your goals and objectives, simply embrace these three attributes and re-read the five truths when the next crisis arises.   

It’s been a great four decades. I’m excited to see what the future brings for us all.  We will be here to help, so please don’t hesitate to call if we can be of service.

Data courtesy of YCharts.com. S&P 500 Index returns are from 01/01/2000 through 07/02/2025. The S&P 500 index is an unmanaged index of the 500 largest public companies in the United States. Individuals cannot invest directly in the index. Past performance does not guarantee future returns.