TL;DR
Market crashes happen, and “recoveries” don’t tell the whole story. Past performance isn’t a guarantee—it’s a siren song.
Story
John dreamed of early retirement. Then the market tanked. Poof. Savings gone. Sound familiar? History rhymes—1929, 2008, and now… what’s different?
This chart whispers sweet nothings: “Stocks always bounce back!” But whispers can lie. Let’s unpack the sugar-coated truth.
‣ S&P 500: 500 biggest US companies—a rough market health check.
The chart shows 12 times the S&P crashed 20+%. 8 times, it recovered within a year. Yay! But those “recoveries” hide inflation’s silent theft.‣ Inflation: Your money buys less over time—like air slowly leaking from a tire. What cost $1 in 1930 costs $17 today. So, “recovery” doesn’t mean you’re whole.
Those green bars? Soothing, right? They ignore the why behind crashes. 1929? Reckless lending. 2008? Housing bubble. Now? Geopolitics, tech wobbles, who knows? Each crisis is unique. Blind faith in past patterns? That’s how you get burned.
Think of markets like a casino. Sometimes you win, sometimes the house wins big. The chart shows average recoveries. Your experience? Might be way worse.
Remember John? He learned a harsh lesson: Diversify, understand your investments, and don’t trust rosy charts. History’s full of broken promises—don’t let the market break yours.
Advice
Diversify like your life depends on it. Because it might.