As we enter 2019, RaeLipskie is delighted to celebrate our 30th year of making your wealth work harder for you. Our first 30 years were filled with success, prosperity and giving back, leaving us thrilled to see what our next 30 brings.
In preparation to celebrate our 30th anniversary, RaeLipskie is looking back at some of the most memorable market changes over the last three decades. Through the various triumphs and tribulations of the economy, RaeLipskie has stayed nimble and flexible, committing ourselves to getting the most for our clients. We are proud to have served our clients with trust, experience and integrity no matter what happens. Remember that volatility is the price we pay for superior long-term returns, market changes are normal and expected.
As we enter the new year be sure to read our post about Slimming Down Debt for The New Year.
Read on to learn more about some of the most notable stock market changes over the last 30 years.
The Friday the 13th Mini Crash of 1989
In a superstitious twist the market suddenly and dramatically dropped on the morning of Friday, October 13th, 1989. At the close, the S&P 500 dropped 6.12% while the Dow showed a 6.91% loss leaving traders puzzled. Many posit that this crash — sometimes referred to as Black Friday — was caused by the failed leveraged bailout deal in which UAL Corporation was attempting to acquire United Airlines. The $6.9 billion deal collapsed after the Association of Flight Attendants (AFA) voted against the deal, bringing the whole market down with it.
Dot Com Bomb
In the late 90s, tech companies experienced valuations rising faster than they had for any industry, despite some internet companies having little physical assets. By the early 2000s, many “dotcoms” started to report a lack of profits. As many investors scrambled to move their funds, stock prices plummeted, resulting in the dot com bubble bursting by 2001.
The subprime meltdown refers to the sharp increase in high-risk mortgages that went into default starting in 2007. The housing boom of the early 2000s – combined with low interest rates at the time – prompted many lenders to take on greater risks by offering home loans to borrowers with poor credit. When the real estate bubble burst, many borrowers were unable to make payments on their subprime mortgages. This bubble contributed to the most severe recession in decades.
2010 Flash Crash
The Flash Crash consisted of an unprecedented rapid decline in the stock market followed by a chaotic recovery. Over the course of approximately 40 minutes on May 6th, 2010, stock indexes such as Nasdaq Composite, Dow Jones Industrial Average and the S&P 500 experienced a trillion dollar (USD) crash followed by a quick rebound regaining 70% by the end of the day. There have been similar events since, including the August 22, 2013 flash crash. Trading was halted at the Nasdaq for over 3 hours when computers at the New York Stock Exchange were unable to process pricing information.
FANG is the acronym coined by CNBC’s Mad Money host Jim Cramer for the four hottest technology stocks in the 2017 market – Facebook, Amazon, Netflix and Google (now Alphabet, Inc.). These stocks had (and still have) a large impact on the value of the index due to their high S&P 500 index rankings. As of 2017, FANG stocks had sales growth exceeding 20%, expected long-term growth rates of 15% or higher and market cap of over $65 billion.
The last 30 years have demonstrated that through intelligent strategy and flexible investing, one can stay successful throughout the many market changes. No matter what happens RaeLipskie is here to offer their expert advice on how to make your wealth work harder.
As we look forward to what 2019 will bring, be sure to check out our 2018 Year in Review.
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