Updated 17 min read
A version of this post first appeared on TKer.co
One of the benefits of aging as an investor is that you accumulate invaluable experience and perspective by living through a lot of very bad economic and financial market events.
These include events when, in the moment, it felt like things had permanently taken a turn for the worse. But time after time, you're reminded that you can't keep the U.S. economy and stock market down for very long.
I like to reflect on those events and recall the unpleasant memories because it helps me better process current and future periods of turmoil and crisis. And the more I reflect, the more I feel like I understand why we keep bouncing back.
In the late 1990s, I was just another immature high school kid without many cares in the world. I didn't really keep up with current events. But I remember the Asian Financial Crisis because it was one of the topics in prayers my dad would give at his church in Kentucky. I'll never forget hearing "IMF" come up in those Korean prayers because it was so unusual.
Among other things, the Korean won collapsed by more than half against the U.S. dollar over a very short period at the time. This was a particularly big problem for immigrants closely tied to family back in Korea. I didn't quite understand it at the time, but I remember the mood being disturbingly gloomy for a while.
The Asian Financial Crisis saw major currencies quickly collapse. (Source: FRED)
I don't have many memories from the Dot-com Bubble bursting. Back then, I had little interest in or exposure to the stock market, and neither did the people around me. But I do remember watching 9/11 live on TV in my dorm with my roommates at Boston University. I remember not being able to get a hold of family members in New York and Kentucky because the phones were overloaded. I remember the extreme range of reactions from my friends: some fled Boston out of fear; some used it as an excuse to skip some classes; some explored joining the armed forces. Everyone was rattled. Everyone felt less safe.
And for my college friends and I, it soon became clear that we would all be entering a tighter job market with an elevated unemployment rate. Things weren't great.
The economy looked great when I entered college in 2000. It wasn't as great when I graduated in 2004. (Source: FRED)
After graduating from college in 2004 and after months of searching, I randomly got a job as a contract paralegal where I got my first serious introduction to equity research. I quickly became hooked on learning about what made the stock market move. In 2006, I got a job at Forbes Newsletters researching and writing up stock picks. I also enrolled in the CFA program that year, which helped me develop a sophisticated understanding of things like mortgage backed securities, collateralized debt obligations, derivatives, and value-at-risk models.
