Still Owning 28 Years Later

This Monday marks the 28th anniversary of the largest single day decline in stock prices.

On October 19, 1987, market prices fell almost 25%. Yes, you read that correctly. 25% in one day!

Imagine, at the end of any given day (not a month or a year), the value of your equity holdings dropping 25%.

Do you remember that day?

At the time, it seemed to most that it was the end of the world…or, at least, the end of our financial system as we knew it.

Imagine today’s sensationalistic financial media getting a hold of that day’s events! It would make the recent August correction feel like a walk in the park.

Interestingly, however, something completely unexplainable has taken place since that infamous day. The world didn’t end and the financial system didn’t collapse.

Not only did it not collapse, but it has grown to unfathomable heights.

To be specific, on that dreaded day, the S&P 500 Index closed just under 225.

Last Friday, October 9, 2015, just shy of 28 years later, the S&P 500 closed at 2,017.

Do the math for a moment and you’ll discover that the value of the 500 largest companies in the United States increased almost nine times since then. And, this does not include dividends paid each year which averaged over 2% per year.

How Can We Benefit From This?

So, why am I bringing up the awful reminder of a single day 28 years ago? Well, as with all forms of adversity, there’s a lesson which will serve us better in the future.

  1. First, while it may feel entirely unique based on the way it’s reported in the news, just as it did back on October 19, 1987, recognize that whatever is going on in any given day, week, or month isn’t really that unique from an historical perspective. Chances are great that we’ve been through it before, and you’ve survived its impact.
  2. Second, stock market prices have always been “volatile” and they will continue to be “volatile”. But, volatility is not the same as loss. I can’t overemphasize just how important that reality is. It’s simply a temporary change in price, and a reality imbedded in investing that all confident and successful retirees have to come to grips with. All major price declines have historically been temporary. Not some of them. All of them.
  3. Investing takes real discipline. It’s not good “timing” that is the key to investing. It’s the duration of time that you maintain ownership that matters. As it was if you didn’t jump out back in October, 1987, resiliency is typically rewarded.
  4. You can’t even begin to think about owning any investments at this “retirement stage” in your life before taking the time to carefully craft and develop a well thought out long term plan (Retirement Blueprint) based on your own unique set of priorities and resources. Without it, any significant market volatility is likely to throw you into a tailspin and take you off of the disciplined path that is necessary for the investment endurance required at this stage in your life.
  5. Lastly, remain disciplined in spite of daily market movements. Once you’ve taken the preceding four steps, then your job is to “objectively” monitor your results and rebalance to your prescribed mix on a regular basis without emotion.

Let’s hope we don’t have to live through another day like October 19, 1987. But, if we do, this time around, you’ll be a lot better prepared if you follow these strategies and remember that “this time is NOT different”.

Committed To Your Relaxing Retirement,

Jack Phelps
The Retirement Coach

P.S.: WHO do you know who could benefit from receiving my Retirement Coach “Strategy of the Week”? Please simply provide their name and email address to us at Or they can subscribe at I appreciate the trust you place in me. Thank you! (The content of this letter does not constitute a tax opinion. Always consult with a competent tax professional service provider for advice on tax matters specific to your situation.)