How the infamous market crash of 1987 could ease your worries about stocks

Zoom out on market history, and one of the scariest crashes ever becomes a mere blip.

VIEW IN BROWSER | SUBSCRIBE WED, NOV 16, 2022 This week's newsletter was written by Ryan Ermey, a senior reporter covering money and investing for CNBC Make It. You can follow him on Twitter @RyanErmey.  Sometimes, when I feel myself getting wrapped up in drama in my life, I like to take a second to zoom out and put things in perspective.    And no, I don't mean ask my therapist about it. I mean, really zoom out. How will whatever I'm going through right now figure into the grand scheme of my life? Or, you know, in the scope of human history — from the dawn of man until the heat death of the universe? Maybe I'm a lunatic, but it usually brings me some comfort.   Right now, there seems to be daily drama with the stock market. From early January through mid-October, the S&P 500 fell 25% on a cocktail of bad news, which included rampant inflation, rising interest rates, a continuing pandemic and a land war in Europe. Stocks appear to have been making a comeback of late as some market watchers believe inflation may have peaked.    Still, some economists believe now is a great time to sell, with the current uptick representing a brief respite before a more painful recession hits in 2023.   So what's an investor to do? Buy? Sell? I personally like to keep an eye on 1987. Remember 1987? Investors who were around at the time definitely do. On Oct. 19 of that year, the Dow Jones Industrial Average fell 22.6% — the largest one-day drop in that index's history. The day came to be known as Black Monday.   Headlines at the time were terrifying. Crash! Panic! Bedlam on Wall Street! All told, between Aug. 25 and Dec. 4, 1987, the broad U.S. stock market lost 33.5%. If you were looking at your portfolio at the time, it probably looked like a disaster. Some 20 months later, the market had fully recovered and would go on to achieve new highs.    In light of that fact, I recommend the following exercise: Type "S&P 500" into Google. When the chart comes up, select "Max." Now find 1987.   The historical upward trajectory of the stock market has reduced it to a tiny blip on your screen, and that's the point all the market experts who tell you not to panic and to stick to your long-term plan are trying to make.    If the market continues to behave as it always has, whatever your portfolio is doing today, tomorrow or next year ultimately won't matter much in the decades that you're likely to be investing.   As long as you're investing consistently in a broadly diversified portfolio of stocks, any drama in your portfolio will eventually matter as little as it did in 1987. What do you want to see from the Make It video team? Take this survey to share your thoughts.   Join the CNBC Make It: Your Money virtual event on Dec. 13th! It will give you actionable and concrete information to level up your earning power. From making the most of that side hustle, to generating passive income, to learning how to negotiate like a boss, find out how you can earn more, while possibly working less. Register today. Trending articles from CNBC Make It Sam's Club is taking on Costco's famous $1.50 hot dog and soda—by lowering its own combo to $1.38 Student debt forgiveness is on hold for now—here's why it's blocked and what could happen next Jeff Bezos plans to give away most of his fortune: Why 'it's a big deal,' from a philanthropy expert Toys, washing machines, doughnuts: 10 items that actually got cheaper last month The do's and don'ts of office party etiquette: 'You're not in a personal space, you're in a professional space' Unsubscribe Manage Newsletters Digital Products Join the CNBC Panel Feedback Terms of Service Privacy Policy   © 2021 CNBC LLC. All rights reserved. A property of NBC Universal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis. Data also provided by THOMSON REUTERS