Updated: May 3, 2013 12:14PM
Originally published: September 12, 2001
Whenever I’ve been asked wheter I fear a bear market, I’ve always pointed out that over the long run, you should make money in a broadly diversified portfolio of American stocks. In fact, there has never been a 20-year period--going back to 1926--where you would have lost money investing in America’s largest companies.
Today is no different.
We have survived and prospered.
There have been several times in the past 75 years, since 1926, when America’s future looked bleak. But great adversity has always pulled America together. We are a nation of survivors. It’s in our genes, no matter how our forefathers arrived on these shores. We will survive. And so will our system.
We’ve survived internal threats. Surely, the Depression, which followed the stock market crash and left Americans selling apples on street corners, was a threat to our future. Anyone with a memory of those dark times must acknowledge the despair. But we survived--and prospered.
We’ve survived external threats. When Pearl Harbor was attacked in 1941, the nation huddled around radios in shock, listening to President Franklin Roosevelt console and inspire our nation. Then we pulled together in a gigantic effort to win a war that had previously been a distant conflict. We survived--and prospered.
We’ve survived economic threats. When OPEC launched its first oil embargo in 1973, once again we were shocked at our vulnerability. We lined up at gas stations, suffered shortages, and then we pulled together to use our brains and technology to conserve energy and discover more of our own. We survived--and prospered.
We’ve survived currency threats. In 1980 gold soared above $800--and the U.S. dollar collapsed. No one wanted dollars, fearing they would be made worthless by inflation. The prime rate soared to 21 percent as people had to be literally bribed with high interest rates to keep their money in dollar deposits. Our economy threatened to collapse under the weight of high interest rates, and unemployment soared. But sound monetary policies brought the dollar back again. Today it is, by far, the strongest currency in the world. We survived--and prospered.
And now we will survive terrorist threats. I don’t know how we’ll master this threat, but I have every confidence that our country will survive this incredible invasion--will survive and prosper.
Yesterday no one was thinking of financial issues. That’s still only a marginal concern today. Yes, our markets will be physically harmed. They are closed today. The largest government bond trading floor occupied one of the top floors of the World Trade Center. Our major stock exchanges and financial institutions live within blocks of the disaster center. So it may take a while for our financial system to recover in a physical sense.
But for those of you who are worried about our financial future--and your investments--let me make one point clear. If you look at a long-term chart of the stock market, you’ll find--without exception--that at every juncture when our situation looked most bleak, the market was making its bottom. In fact, those fearful times created the best long-term buying opportunities. Those who had faith to stick with their investments, and buy more, were well rewarded.
This is the lesson of history: It doesn’t pay to bet against America. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and is on the board of directors of McDonald’s Corp. and Pennzoil-Quaker State Co. Send questions via e-mail to firstname.lastname@example.org. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast.