Here we are, at the midpoint of an incredible year to say the least. A year that many will want to forget! We’ve had a pandemic, shut down our economy, a market crash, trade issues, and riots. How are we ever going to survive!?
The short answer is…we’ve been here before. I’m often asked by my family, clients, and business associates how on earth I can crawl out of bed every morning and look at the market? Simple, look to the past to guide the future.
Do you think this is the first health crisis we’ve ever had? Think again. Try the Spanish flu of 1918, the Hong Kong Flu in 1968, and the Aids crisis that started in 1980. You can go further back, but this will suffice for now.
Spanish Flu Pandemic of 1918
The 1918 pandemic infected at least 500 million people, of which it is estimated that 50 million perished. Medicine of the day bore little resemblance to today’s massive technological innovations. An infected patient that contracted that virus in the morning was often dead by nightfall.
Here in the US nearly 675,000 people were listed as having died from the virus. Unlike today few, if anyone, were able to earn a living from home. A much higher percentage of the population lived in poverty, and there were no relief checks in the mail. Businesses shut down without PPP forgivable loans or EIDL (Economic Income Disaster Loans) to help them survive, and the Federal Reserve, only four years in existence, hadn’t a clue what to do.
Additionally, we had the Great War which raged in Europe throughout the pandemic. Many of our soldiers died not from enemy bullets, but from the flu. It was also an off-year election. The Dow Jones industrial Average rose 10.51% in 1918, and 30.45% in 1919.
Too far back you say. Well let’s look at 1968 and see if you recognize anything.
Hong Kong Flu of 1968
Like today, in 1968 there was a terrible flu pandemic called the Hong Kong flu which killed over one million people worldwide. In the US, it is estimated to have killed over 100,000 people with a population size half of that of today, most over the age of 65 years old.
Medicine had advanced significantly in the 50 years since 1918 but was nowhere near where we are today. We also faced an economic crisis in 1968, were at war in Viet Nam, faced assassinations, and civil unrest accompanied by massive riots. The combination of funding for the war and the Great Society program caused a large budget deficit and led to inflation.
The Fed sought to curb inflation by increasing interest rates, and that resulted in rising unemployment. During the entirety of the Viet Nam war, 58,220 US soldiers were lost. About 30% of that number, or 16,592 occurred during 1968 with another 87,388 wounded in action. 1968 is often considered the peak of the Viet Nam War.
Martin Luther King was assassinated on April 4th, Bobby Kennedy on June 6th and for eight days at the end of August 1968, there were violent protests leading to eleven deaths, and over 500 injuries. There were also riots in a dozen cities around the country with looting, more death and destruction. It was also an election year in which Nixon defeated Hubert Humphrey. In 1968 the S&P 500 rose 7.66%, fell 11.36% in 1969, and was flat in 1970. Hardly a disaster.
Reasons to be Cheerful
We have problems today to be certain. But we are hoping a vaccine for COVID-19 will be found before the end of the year, and we have reason to be optimistic because of the substantial advances in technological innovation and research since 1968.
The shutdown has hurt many industries and workers, many of whom will no longer be able to return to their previous job. Bankruptcies will increase and it will take time to recover. But, as history shows, we will recover as new industries, products, and services will be created because the American people are built to innovate and succeed.
So, when I get asked that question that I referred to earlier of how I crawl out of bed every morning and look at the market, I think of these reasons to be cheerful. After all, we can’t change the past, the future is all we can control as we all work to Make Our Success Our Legacy.
Questions or Concerns? Reach out!
All-in-all, I’d rather be celebrating July 4th in 2020 than 1968 or 1918 thank you very much! Enjoy the Holiday! Please reach out to me at 480-346-1283, or email firstname.lastname@example.org if you have any questions, or just want to discuss further.
About the Author
John Herbert’s financial industry gravitas comes from almost 30 years’ as a Certified Financial Planner and Certified Portfolio Manager. An accomplished educator, John taught Economics at Chapman University and the University of Phoenix for many years. Sensitive to finding a balance between business, family and finance John has always had a passion for helping people build long-term wealth for their families.