We Stand with France

Like the rest of the world, we are all shocked and saddened by the horrific terrorist attacks in France.

I’m reminded of my first days with Acropolis, although technically, we were everTrade Advisors back then.  My first official act was to write a letter to clients in the days following 9/11.  I don’t think I had been on the job more than a week or two when it happened.

There wasn’t much we could do because the stock exchanges were closed and didn’t reopen until September 17th, the longest closure since 1933.

We knew that stocks would be lower when they did open (-7.1 percent, in fact) and that airline and insurance companies would be hit especially hard (Warren Buffet’s Berkshire Hathaway paid out $40.2 billion in 9/11-related claims).

Despite the chaos and fear, the letter was hopeful: the US had endured attacks and strife before, and we believed that we would emerge from circumstances stronger and, over the long run, we’d be fine.

We didn’t know, however, that stocks would continue to suffer as much as they did.  Keep in mind that markets were already bruised by the dot.com bubble burst.  In 2000, the S&P 500 was down -9.1 percent and in 2001 it fell another -11.8 percent, but the worst was yet to come: the index fell -22.1 percent in 2002.

And yet, despite those terrible returns and the unbearable uncertainty, long-term investors have made out just fine.  Since 9/11, the S&P 500 has returned approximately seven percent per year.

Yes, that’s below the long-term average of 10 percent, but it’s still well above inflation and after the tech wreck, we still had to live through the 2008 financial crisis.  Within this time frame, we actually went through the worst 10-year period in US history.

Stock market futures are pointing to a lower open, but as of this writing, it appears that markets aren’t expecting anything worse than what we went through last week.  Of course, things can change rapidly from here.

It feels a little bit inappropriate to talk about market returns amid the real human tragedy, but markets will continue just as they always have and we will continue to monitor them, pursue our strategy and act if appropriate.  Sadly, terrorism is part of the equation whether we like it or not.

I do feel a little bit better looking at the following link, which includes photos of iconic buildings from around the world that are lit up like the tricolor French flag – I only wish that our own Gateway Arch was on the list.

Our hearts go out to the French people and all of those who were killed in the attacks.  We stand with you.