The New York Times has a plaintive story entitled

I Became a Disciplined Investor Over 40 Years. The Virus Broke Me in 40 Days.

Today's virus stock-market crash IMHO is an opportunity of a lifetime, and a special one at that, for long-term investors to not just survive the crash but significantly increase their net worth BECAUSE of this crash! Let's first look at the writer of this story. I believe he has made a few critical mistakes.

First mistake: Buying stocks! The writer bemoans that his stock portfolio is down MORE than the "broad" averages. Long-term investors do not tie their fortunes to stocks, they buy indexes (either through mutual funds or ETFs). The best stocks for decades, even, can betray you and some can go bankrupt. Examples abound: GE, one the top stocks for over a century, Yahoo, Enron, and most recently, Boeing. Broad based index ETFs, generally, do not go bankrupt. Historically they shapeshift to reflect new market realities and continue to reflect the vibrant American economy.

Second mistake: Getting your history wrong and getting all depressed about it. He says this is the worst crash EVER! Well that is depressing but it is not true. The 1929 Great Depression, the 1987 program trading collapse, the Nixon resignation, parts of the 2001 dot-com/911 bust and the 2009 financial crisis were ALL worse than today's coronavirus crash!

Third mistake: Forgetting history by ignoring the time to recover from crashes in the past. Aside from the Great Depression (which had a 25 year recovery period from 1929's high to 1954's recovery) the average time to recover, peak to peak, is 5.6 years. Very doable.

As I write, the Dow Jones Industrial Average is at 22,133.39-194.09 or -0.87% on the day and -25.15% from the early February all-time high of 29,568.57!  This is the same price the Dow was at in September 2017. We get to live the Trump rally all over again!

This crash hit a low of 18,213.65, on March 23rd, down 38.4% from the all-time high, a mere 8 days ago! This low takes us all the way back to the election of November 2016! In summary, the market has made fantastic one week recovery from -38% to -25%, SO FAR. We will see if it holds. Historically markets take over a year and a quarter to hit lows from an all-time high.

Is there enough here to get broken about? The indexes (VTI, SPY, VOO, QQQ, IWM to name a few) are all on SALE! A huge sale, a pandemic sale! We can hold our current positions and spread out buys across 10% declines and we, or our heirs, can wait 5 years. True, there is NO assurance the market WILL recover but history since 1900 indicates it is so.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.