“History provides a crucial insight regarding market crises: They are inevitable, painful, and ultimately surmountable.”

~~Shelby M.C. Davis. Advisor and Founder, Davis Advisors

History has taught that investors in stocks will always encounter crises and uncertainty, yet the market has continued to grow over the long term. 

Investors in the 1970s were faced with stagflation, rising energy prices and a stock market that plummeted 44% in two years. 

Investors in the 1980s dealt with the collapse of the major Wall Street investment bank Drexel Burnham Lambert and Black Monday, when the market crashed over 22% in one day. 

In the 1990s, investors had to weather the S&L Crisis, the failure and ultimate bailout of hedge fund Long Term Capital Management and the Asian financial crises. Investors in the beginning of the 2000s experienced the bursting of the technology and telecom bubble, 9/11 and the advent of two wars. 

Today, investors are faced with the collapse of residential real estate prices, economic uncertainty and a turmoil in the financial services industry. Through all these crises, the long-term upward progress of the stock market has not been derailed.
Investors who bear in mind that the market has grown despite crises and uncertainty may be less likely to overreact when faced with these events, more likely to avoid making drastic changes to their investment plans and better positioned to benefit from the long-term growth potential of equities.

It is worth mentioning here that Shelby Cullom Davis borrowed $100,000 in 1947 and turned it into an $800 million fortune by the year 1994.

Bottomline: Great investors throughout history have understood that building long-term wealth requires the ability to control one’s emotions and avoid self-destructive investor behavior. Though each of these great investors offers perspective on a distinct topic, the common theme is that a disciplined, patient, unemotional investment approach is required to reach your long-term financial goals. For more  you can visit: www.sumanspeaksplus.blogspot.com.