Whether the headline comes from a newspaper or a push notification, there will always be negative news that will make investors wary.
The table below shows standout news events over the past half century. Since we’re in 2021, we highlighted events from each year ending in one along with ever-tumultuous 2020. Disciplined investors who tuned out the noise and stayed invested in stocks were rewarded in the long term.
Staying Invested Despite Negative News
| Year | Reasons Not to Invest | Stock Market Returns | Value of $10k Investment Today* |
| 1971 | Bomb explodes at the US Capitol |
14.30% | $1,754,643 |
| Vietnam War escalates | |||
| Pentagon Papers released |
|||
| 1981 | Bomb explodes at the US Capitol |
-4.92% | $777,649 |
| Vietnam War escalates | |||
| Pentagon Papers released |
|||
| 1991 | First Iraq War |
30.47% | $211,063 |
| Rodney King beating | |||
| Recession |
|||
| 2001 | 9/11 terrorist attacks |
-11.89% | $42,231 |
| Dot.com bubble fallout | |||
| Record bankruptcies |
|||
| 2011 | US bonds lose AAA status |
2.11% | $36,700 |
| Middle East turmoil | |||
| Oil prices spike |
|||
| 2020 | Worst pandemic in 100 years |
18.40% | $11,840 |
| Presidential impeachment | |||
| Double-digit unemployment |
|||
| 2021 | US Capitol riot |
??? | ??? |
| Vaccine deployment challenges | |||
| Texas energy crisis |
*Assumes an initial investment of $10,000 in stocks beginning on January 1 of the date in column 1 through December 31, 2020. Assumes reinvestment of dividends and capital gains and no taxes or transaction costs. Stocks are represented by the S&P 500 Index, which is a market capitalization-weighted price index composed of 500 widely held common stocks. Past performance does not guarantee future results. The index is unmanaged and not available for direct investment. For illustrative purposes only. Sources: Morningstar and Hartford Funds, 2/21.
Perhaps nothing illustrates the resilience of US financial markets more than the confluence of historic events in 2020. And while stocks initially sold off sharply due to COVID-19, they recovered by the end of the year.
What will 2021 bring? Even if it’s a down year for stocks like 1981 or 2001, history suggests the market is likely to be resilient and reward investors over time.
Your financial professional can help you create a plan so you can be a confident and disciplined investor.
Investing involves risk, including the possible loss of principal. Individual investor’s circumstances may vary. Before investing, consider your personal goals, risk tolerance, and time horizon. While diversification does not ensure a profit or protect against a loss in a declining market, it may be prudent to diversify among equity and fixed-income investments.
This material is provided for educational purposes only.
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