23 July 1996: Garzarelli calls a crash that never comes
Elaine Garzarelli, famous for predicting the 1987 crash, abruptly dropped her bullish Dow target and warned that the market could fall 15 to 25 percent. The Dow reversed from an early gain to close lower. Then it ignored her entirely, climbing about 27 percent over the next six months and never getting near her implied target again. One famous correct call is not a forecasting method.
The lesson: Past forecasting fame is no guarantee; ignore market predictions and focus on long-term value.
What it meant for investors
$1,000 in S&P 500 index fund at the start of 2000 → $4,626 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2000, the first year in our price data after the event. 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 |
|---|---|---|---|
| 2000 | $1,470 | $4,626 | $4,626 |
| 2003 | $880 | $7,727 | $7,727 |
| 2005 | $1,180 | $5,763 | $5,763 |
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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