23 August 2019: A trade war tweet storm sinks the Dow 623 points
China announced new tariffs on US goods, and President Trump responded with tweets saying US companies were 'hereby ordered' to start looking for alternatives to China. The Dow dropped about 623 points, roughly 2.4 percent, on a day when Fed chair Jerome Powell was also speaking. Trade tensions rattled markets repeatedly that year. Despite the drama, the S&P 500 still ended 2019 with a strong gain.
The lesson: Headline-driven selloffs are frequent; they rarely decide what a full year of returns looks like.
What it meant for investors
$1,000 in S&P 500 index fund at the start of 2020 → $2,092 today, vs $2,092 in the S&P 500.
We start the clock at the start of 2020, the first year in our price data after the event. That is 2.1 times the money, but $0 less than a plain index fund made over the same years.
What S&P 500 index fund teaches: Owning the whole market removes the risk of picking the wrong company but not the risk of a lost decade, so time horizon matters as much as diversification.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $2,060 | $3,301 | $3,301 |
| 2018 | $2,700 | $2,519 | $2,519 |
| 2020 | $3,250 | $2,092 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought S&P 500 index fund? Every starting year and the full story →
More S&P 500 index fund history
- 5 February 2018: Volmageddon: the Dow drops 1,175 points
- 19 February 2020: The S&P 500 hits a record before COVID
- 29 February 2020: The US reports its first COVID-19 death
- 3 March 2020: The Fed makes an emergency rate cut
- 6 March 2009: The S&P 500 touches 666
- 9 March 2009: The bear market bottoms
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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