27 February 2007: Shanghai sneezes and the world catches cold
China's Shanghai Composite plunged nearly 9% in a single day, its worst drop in a decade, on rumors of a crackdown on speculation. The shock rippled around the globe; the Dow fell 416 points, its biggest decline since the days after the September 2001 attacks. Markets recovered and hit new highs within months, but it was an early tremor before the real earthquake of 2008.
The lesson: Global markets are connected in ways that only become obvious on the worst days.
What it meant for investors
$1,000 in Shanghai Composite at the start of 2007 → $1,444 today, vs $4,789 in the S&P 500.
We start the clock at the start of 2007, the year it happened. That is 1.4 times the money, but $3,344 less than a plain index fund made over the same years.
What Shanghai Composite teaches: Rapid economic growth does not guarantee stock market returns, because dilution, governance and the price paid decide what shareholders actually receive.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2007 | $2,700 | $1,444 | $4,789 |
| 2008 | $5,300 | $736 | $4,626 |
| 2010 | $3,200 | $1,219 | $6,071 |
green = beat the S&P 500 · red = lost money
What if you bought Shanghai Composite? Every starting year and the full story →
More Shanghai Composite history
- 4 January 2016: China's new circuit breaker trips on day one
- 23 January 2020: China locks down Wuhan
- 12 June 2015: China's stock bubble peaks
- 11 August 2015: China devalues the yuan
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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