Bank Apocalypse?
“The stock market is a device for transferring money from the impatient to the patient.” - Warren Buffett
Watch enough news, and you might start to think a bank apocalypse is hiding under your bed at night, waiting for you to fall asleep. Some important perspective, courtesy of Money Visuals:
- 14.5 years ago, Lehman Brothers filed for bankruptcy with almost $700 billion in assets.
- 11 days later, Washington Mutual went under with another $327 billion in assets.
- From 2008-2012, over 400 banks failed.
But the world didn’t end. It only felt like it was ending.
What happened in the markets?…
- Prior to the 2008 Great Financial Crisis (GFC), the Dow Jones Industrial Average peaked at about 13,600 on October 9, 2007.
- Then the Dow Jones fell, finally stopping at about 7,000 on March 9, 2009.
- Today, the Dow Jones is at about 32,000.
Despite still being in a bear market right now here in 2023, the market has:
- More than doubled since the pre-GFC peak.
- And it is up more than 400% since the “end-of-the-world” in 2009.
It turns out that Warren Buffett might be on to something with regards to patience.
If history is any guide, this down cycle will end well before the news-of-the-day tells us it should. And the next up cycle will begin in earnest while we are all still fearful and uncomfortable. The markets have done wonderful things in building wealth for so many, but they have never made it easy.
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