Financially Speaking Podcast

51

Published on May 9, 2014

Recent tensions between Russia and Ukraine have once again brought fears of a market calamity to investors. In part that fear is fueled by the financial commentators on television who use the event to get you to listen to their shows.  They make everything worse by discussing the worst-case scenario of the news event.

The fact is that there have been 51 notable crises since 1900. These crises range from world wars, to the Cuban missile crisis, to the 1987 stock market crash.  On average, the stock market was higher six months after the crisis than before crisis.  The research indicates that investors overreact and always assume the worst-case scenario when these events occur. 

Looking back it is clear that during these periods of market overreaction is a good time for some investors to put more into stocks.

It has happened that way 51 times in the past 114 years.  Tell that to the talking heads who claim to be the "financial experts.”

 

Tags: stock market crisis; investing

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