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Stock Returns After Crisis
(Updated 7/18/08)
The events of September 11, 2001 were unprecedented. When the stock market re-opened, the decline during the first week was the second most severe in Wall Street history. However, Wall Street has endured numerous crises in the past.
Here are some interesting numbers on the Dow as posted at Suite101.com by Rande Spiegelman on September 28, 2001:
%Gain/Loss
Days After
Reaction Dates
Event
Reaction
Dates
22 63 126
Fall of
France
05/09/1940 - 06/22/1940 -17.1 -0.5 8.4
7.0
Pearl
Harbor
12/06/1941 - 02/10/1941 -6.5 3.8 -2.9
-9.6
Truman Upset Victory 11/02/1948 -
01/10/1948 -4.9 1.6 3.5
1.9
Korean-War
06/23/1950 - 07/13/1950 -12.0 9.1 15.3
19.2
Eisenhower Heart Attack 09/23/1955 - 09/26/1955
-6.5 0.0 6.6
11.7
Sputnik
10/03/1957 - 10/22/1957 -9.9 5.5
6.7 7.2
Cuban Missile Crisis
08/23/1962 - 09/23/1962 -9.4 15.1 21.3
28.7
JFK Assassination
11/21/1963 - 01/22/1963 -2.9 7.2 12.4
15.1
U.S. Bombs Cambodia 04/29/1970 -
05/26/1970 -14.4 9.9 20.3 20.7
Kent State
Shootings 05/04/1970 - 05/14/1970
-4.2 0.4 3.8 13.5
Arab Oil
Embargo 10/18/1973 -
12/05/1973 -17.9 9.3 10.2 7.2
Nixon
Resigns
08/09/1974 - 08/29/1974 -15.5 7.9 -5.7
12.5
U.S.S.R. in Afghanistan 12/24/1979 - 01/03/1980
-2.2 6.7 -4.0 6.8
Hunt Silver
Crisis 02/13/1980 - 03/27/1980
-15.9 6.7 16.2 25.8
Falkland Islands
War 04/01/1982 - 05/07/1982 -4.3
-8.5 -9.8 20.8
U.S. Invades Grenada
10/24/1983 - 11/07/1983 -2.7 3.9 -2.8
-3.2
U.S. Bombs Libya
04/15/1986 - 04/21/1986 -2.6 -4.3 -4.1
-1.0
Financial Panic '87 10/02/1987 -
10/19/1987 -34.2 11.5 11.4 15.0
Invasion of
Panama 12/15/1989 -
02/20/1989 -1.9 -2.7 0.3
8.0
Gulf War Ultimatum 12/24/1990 -
01/16/1991 -4.3 17.0 19.8 18.7
Gorbachev
Coup
08/16/1991 - 08/19/1991 -2.4 4.4
1.6 11.3
ERM-U.K. Curr Crisis 09/14/1992
- 09/16/1992 -6.0 0.6 3.2
9.2
World Trade Ctr Bombing 02/26/1993 - 02/27/1993
-0.5 2.4 5.1
8.5
Russia-Mexico-Orange-Co 10/11/1994 - 12/20/1994
-2.8 2.7 8.4 20.7
Asian Stock Mkt
Crisis 10/07/1997 - 10/27/1997 -12.4
8.8 10.5
25.0
Russian-LTCM-Crisis 08/18/1998 -
10/08/1998 -11.3 15.1 24.7
33.7
Mean -8.1 4.5 6.9
12.9
Median -6.2 4.2 6.7
12.1
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To give you an example of how to read the numbers, let’s look at the market crash in 1987. The market’s slide started in early October culminating in October 19th. During that period, the Dow declined 34%. 22 trading days later
(1 month), the Dow rose 11.5%. After 63 trading days (3 months) from the reaction period, the Dow had risen 11.4%. Six months after the reaction period (126 trading days), the Dow rose 15%.
Simply buying in 1940 and holding through 1998, the annual rate of return was 12.9%.
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