The Anniversary of Black Monday

October 18, 2021

Imagine watching almost 22% of your entire account value vanish in one day. Let’s say your account was $500,000 on Friday and when you opened it on Monday morning it was off $110,000 and clocked in at just $390,000.

Unsettling. And guaranteed to give you “a bad case of the Mondays.”

Something similar would have happened if all your portfolio was in the Dow Jones Industrial Average on Black Monday, October 19th of 1987. Tomorrow is the anniversary of that infamous day.

There is something worse than watching your value plummet.

Much worse.

Imagine selling that day. Reacting to the nausea of that moment by liquidating all your stock investments. Unfortunately, many who are prone to do such a thing, should never do such a thing. Oftentimes they have some investing years left or their heirs have decades of investing years left.

The world didn’t end on Black Monday. In fact, as the above 2 year chart reveals, if investors would have held on for just two years their investable assets would be worth significantly more than the Friday before that ugly Monday. It would have been only a year and a half or so to get back to even. A year in a bad market feels like dog years, yet in the scope of 1 investing lifetime which is composed over decades, a few years is a blip.

Is it easy to hold? No. Does this mean one should never sell? Same answer. Every situation and investor are different but selling in the worst declines is normally the worst time to do so.

Remember that.

And I hate to tell you this, but when something similar happens again, you are going to forget. Write that down!