Retire 10 Years Later With One Simple Trick: Panic
What the Market Does When the Headlines Say “Panic”
Written by Stephen Iaconis, CFP®
-
It’s like clockwork every time the headlines declare doom and gloom, the calls start rolling into our office. “Should I sell?” “Is this the big one?” “What if this time is different?”
We get it. When all you hear everywhere you turn is—recession, crisis, collapse—it’s hard not to feel like you’re standing on the edge of a cliff. But here’s the thing:
The market almost never reacts to headlines the way you’d expect. And the headlines almost never reflect what the market is about to do next.
Let’s walk through the last 50 years and see how often panic turned into opportunity—for those who stayed calm.
The 1970s: Fear of What We Didn’t Understand
The 1970s were a mess. Oil embargoes. Gas lines. Inflation that felt like it might never end. The word “stagflation” entered the national vocabulary, and investors were sure the system was broken. In 1973 and 1974, the market fell almost 50%.
But while the headlines were still focused on the misery index, something strange happened: stocks started quietly climbing again. No fanfare. No media celebration. Just growth.
By 1976, the S&P had clawed its way back. And by the time the news caught up, the best gains were already behind us.
1987: The Market Fell 22% in One Day
It was a Monday in October when the market dropped more than 22% in a single session. They called it “Black Monday,” and if you’d picked up a newspaper the next morning, you’d have thought capitalism itself was on trial.
But here’s the part that rarely gets mentioned: by the end of that same year, the market was up. Not just back to where it started—up for the year. Two years later, it was up almost another 30%.
The headlines told one story. The actual investors—the ones who stayed calm—lived a very different one.
1990s: War, Crisis, and the Tech Boom That Wouldn’t Quit
When the Gulf War began in 1990, fear spiked. Oil prices surged. Markets dipped. But as soon as the uncertainty lifted, the rebound was swift with 1991 seeing a 30% rally. Same story in 1998 when Russia defaulted on its debt and a giant hedge fund nearly toppled Wall Street. The S&P dropped hard—but ended the year up nearly 27%.
And then came the tech bubble.
2000s: Bubbles and Bailouts
The dot-com bubble bursts in 2000. Pets.com becomes the poster child for excess. The S&P 500 loses nearly half its value over the next two years. Then, just as things start to recover, 2008 hits.
Lehman Brothers collapses. Mortgage lenders implode. Pundits use phrases like “financial armageddon.” The market drops 57%. This is one of the rare instances where the headlines matched the severity.
But here’s what few remember: by March 2009, the rebound had already begun. Headlines were still gloomy, but the market—always looking ahead—had seen enough. The people who stayed invested made it all back, and more, in the years that followed.
2020: Panic at the Speed of the Internet
COVID hit differently. This time, the fear wasn’t abstract. It was personal. The whole world shut down. Stocks collapsed—34% gone in just 23 days.
And yet, by the end of the year, markets had not only recovered... they had surged. Technology, healthcare, logistics—all up double digits. The news was still tracking case numbers, still questioning whether anything would ever be “normal” again. But Wall Street was already looking ahead.
The headlines lost the plot. Again.
Does it Really Make That Big of a Difference?
Great question, and one that can actually be answered using real world historical performance data.
Let’s imagine a 23-year-old who started investing in 1970. They put away just 5% of the average U.S. salary each year—roughly $360 that first year—and kept it up for the next 55 years.
If they had just put it on auto-pilot and left it alone through all the crises—the oil embargo, Black Monday, the dot-com collapse, the Great Recession, and COVID—their portfolio would have grown to $670,743 by 2025.
However, if that same investor had sold out during each of those headline-driven panics and waited to re-enter once the news cycle turned optimistic, their portfolio would only have reached $453,700. That’s almost 33% less, caused not by poor returns—but by poor timing. The market rewards patience. Headlines punish panic.
So Why Do Headlines Feel So Convincing?
Because they’re designed to. Crisis grabs your attention. Panic keeps you reading. But markets don’t care about feelings. They care about expectations.
When the media reports on a crisis, it’s usually already priced in. By the time you’re reading about it, the market is already moving on. That’s why the biggest gains often come right after the scariest moments.
This Isn’t a Guess. It’s a Strategy.
At Financial Advice & Consulting, we’re not trying to beat the market with secret sauce. We’re not selling “the next big thing.” We help people make sound decisions based on reality—and trusting the headlines is probably the worst decision you can make.
So the next time you turn on the news and hear that the sky is falling and society as we know it is on the brink of collapse…Pause…Breathe…Ask yourself:
Is this really new information? Or is it just loud?
Because when the crowd starts yelling “Sell!”—history has shown that might be exactly the wrong time to do it.
Want to talk with someone who doesn't panic when the market gets noisy?
We’re here for that.
-
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.