1 December 2008: Recession made official, Dow drops 680 points
The National Bureau of Economic Research declared that the US had been in recession since December 2007, a full year earlier. On the same day the Dow fell about 680 points, nearly 8 percent. The announcement surprised almost nobody who had a job or a mortgage. Official recession calls come so late that markets have usually moved long before the economists agree.
The lesson: By the time a recession is official, the market has usually already priced much of it in.
What it meant for investors
$1,000 in S&P 500 index fund at the start of 2008 → $4,626 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. That is 4.6 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 |
|---|---|---|---|
| 2008 | $1,470 | $4,626 | $4,626 |
| 2010 | $1,120 | $6,071 | $6,071 |
| 2012 | $1,280 | $5,312 | $5,312 |
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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