6 May 2010: The Flash Crash
On the afternoon of May 6, 2010 the Dow fell almost 1,000 points in minutes, about 9%, then recovered most of it within half an hour. Some stocks briefly traded for a penny while others hit absurd highs. Investigators later blamed a large automated sell order meeting thin, algorithm-driven liquidity. Exchanges added circuit breakers for individual stocks. Investors with stop-loss orders learned what a bad fill looks like.
The lesson: Automatic sell orders can execute at the worst price on the worst day; liquidity is not guaranteed.
What it meant for investors
$1,000 in S&P 500 index fund at the start of 2010 → $6,071 today, vs $6,071 in the S&P 500.
We start the clock at the start of 2010, the year it happened. That is 6.1 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 |
|---|---|---|---|
| 2010 | $1,120 | $6,071 | $6,071 |
| 2012 | $1,280 | $5,312 | $5,312 |
| 2015 | $2,060 | $3,301 | $3,301 |
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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