It’s easy to get caught up in recent events, but it is interesting to look back at some examples of big stock market falls in the past and what followed.
In 1987 Rick Astley topped the charts and St. Mirren won the Scottish Cup. In October that year the American stock market index S&P 500 fell by 18% for reasons that have never been clear. The losses in America spread elsewhere. The UK stock market index FTSE 100 fell by 23% in just two days.
At the time, some believed this was the end of traditional investment gains.
But by the year 2000 share prices had recovered. The FTSE 100 had gone up by over 200% and the American S&P 500 had gone up by 400%.
But then there was more trouble. The Millennium Bug didn’t come to anything but the dotcom bubble burst. Share prices of technology companies had risen a lot in the late 1990s but then fell considerably.
Then UK share prices recovered again until the financial crisis of 2008 when they fell once more. From 2009 until coronavirus hit, the trend has been mainly upwards.
While the history lessons are interesting reflections, this doesn’t guarantee what will happen in the future.. Past performance cannot be used as a guide to future performance and should never be relied upon in this way.