Although this panic seems like it will never end, keep these dates in
mind and what it felt like:
1974 - The Dow was down 46%. President Nixon was forced to resign. We
were on the brink of being defeated in Vietnam. We were in the worst
recession since the Great Depression. It seemed like the end of the
world - but from December 1974 to September 1976 the market rose over
80%.
1982 - There was double digit inflation, 20% interest rates, a
horrendous recession, unemployment above 10% and a soaring deficit.
Business Week declared "The End of Equities", but our innovative
spirit
took over. We went from one of the least productive countries to the
leader in productivity enhancement. From August 1982 to October 1987,
the S&P 500 rose 230%.
1990 - The Savings & Loan debacle shook the banking system to its core.
The entire financial system was on the brink of disaster, but the U.S.
innovated and responded. From November 1990 to July 1998, the market was
up over 300%.
2002 - With the 9/11 attacks still fresh in our memory, corporate fraud
rocked Wall Street. Enron, Worldcom and Arthur Andersen were indicted
for fraud. All earnings, the foundation of stock market valuations, were
in question. We addressed the problems head on, innovated and from
October 2002 to November 2007, the market was up over 100%.
We live in the greatest country in the world and crises tend to force
innovation and bring out the best in us. In my opinion, we are
witnessing the first true transformation into a global financial
society. We will innovate and emerge stronger. We always have.
"It is said an Eastern monarch once charged his wise men to invent him a
sentence, to be ever in view, and which should be true and appropriate
in all times and situations. They presented him the words: 'And this,
too, shall pass.' How much it expresses! How chastening in the hour of
pride! How consoling in the depths of affliction!" --- Abraham Lincoln,
1859
These words of wisdom were sent to me by a friend:
Our depths of affliction will end,
Mike
Michael J. Krach, Jr., CFA
Chief Investment Officer
Executive Vice President
Amegy Bank N.A.
4400 Post Oak Parkway
Houston, TX 77027