Like most of us, every year at this time I reflect back on the events of September 11, 2001. I’m sure most of us remember exactly where we were at when we heard the news. I remember watching hours of TV coverage and the emotions that came with that. It’s hard to believe that was 13 years ago.
Do you happen to remember what the S&P 500 was valued at the day before 9/11? 1092. Currently the S&P is right around 2,000.
Looking back over the last 13 years, we have had a number of different events to deal with. From 9/11, Enron’s bankruptcy, wars in Afghanistan and Iraq, the financial crisis which led to the “Great Recession”; it has been an eventful 13 years, to say the least. Despite all those things, the S&P 500 is still up over 80% during that time (over 130% including reinvested dividends).
Throughout history there have always been events or headlines that cause great concern, but for most of us, we can’t control them. What we can control is how we react to those headlines. This does not stop TV programs from sensationalizing the events of the day and rattling our emotions. The problem is, those emotions can lead to poor investment decisions. I read an article recently that had a clever phrase which captured this idea. It said, “TV does not drive stock prices, profits do.”
The fact is, there will always be concerning events taking place. Events that are unique or different from events in the past. These events generally have little impact on company profits or capital markets, long-term, however. How we personally react to those headlines or events can have a major impact on our investment success. I think it’s important to keep that perspective for the next time something happens, because it will. Keep that in mind when you turn on the news tomorrow, and the next day. This will also allow us to focus on the things that really matter, like remembering those that were lost on that day 13 years ago.
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