29 September 2008: House rejects bailout, Dow drops 778 points
The House of Representatives voted down the $700 billion bank rescue plan known as TARP. Stocks plunged as the vote count was shown on screens, and the Dow fell about 778 points, then its largest point drop ever. The shock convinced lawmakers to change course, and a revised version passed days later. Markets had made their opinion very clear.
The lesson: Markets react violently to political uncertainty during crises, often forcing a change in course.
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.
Play Sixty-40