“There is nothing new in the world except the history you do not know.” -Harry S. Truman
What a few weeks it has been. A former president was inches away from being assassinated, while the current president was forced out of running again by his own party, even though he won basically all the convention delegates and was quite popular in his party just a month before. Now add in the yen carry trade blowing up, the worst day for the Japanese stock market since 1987, the Federal Reserve (Fed) being behind the curve, and global markets melting down. And this isn’t even bringing up the continued heightened tensions between Russia and Ukraine, Israel and Hamas/Iran, and bubbling tensions between Taiwan and China.
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It sounds like a lot and it is, but it turns out chaos is normal. Here’s a chart I created that sums it all up nicely. Amid some of the worst events in history, stocks have continued to eventually move higher, suggesting all those scary times and lower prices were really good opportunities. They sure didn’t feel like it at the time, but they were.
We aren’t saying to ignore these events, as they can indeed cause major issues. Russia invading Ukraine for instance contributed to the major spike in inflation back in 2022 and this spike was behind the bear market we saw in both stocks and longer-term bonds. 9/11 pushed our economy into a recession and the tech bubble bear market likely lasted longer as a result. But the reality is bad news eventually will give way to good news. What that chart above doesn’t show is all the good things that have happened throughout history and it is safe to say they dwarf the negatives.
We could be looking at our first 10% correction of 2024. It is important to remember that 10% corrections happen most years and are more normal than you might think. Even last year, when stocks gained nearly 25%, we had a 10% correction into late October.
For more on all of this, here’s our latest Carson Take Five video, where Sonu Varghese and I discuss why chaos is normal.
For more content by Ryan Detrick, Chief Market Strategist click here.
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