When the Investing Lightning Strikes
By Chris Hanson
A small passing of time can change the course of history and the value of your investments. Events occurring in minutes have toppled regimes and installed new ones. The stock market has suffered huge declines and enjoyed strong advances within a few trading days.
Let’s discuss what may be the most important minute in US history, the night of April 18, 1775 at our Old North Church. Two colonial rebels, Robert Newman and Captain John Pulling, Jr. were on a mission to alert fellow rebels of the British Army’s advancement route through Boston. After keeping watch for hours, they spied troops putting boats in the Charles River. Newman and Pulling burst into the church, climbed a series of staircases and ladders, bringing two lanterns to the steeple eight stories above.
Executing a pre-planned strategy, the two hooligans hung the lanterns facing Charlestown to signal the Sons of Liberty members that George III’s troops were taking a water route through Boston. It was the beginning of the Redcoats’ journey to Lexington where they intended to destroy the rebels’ armaments. The lanterns were only displayed for 60 seconds, but that began an immensely consequential series of events as the final catalyst to the American Revolution.
Riders scattered across the region and warned colonists of the British advance. The most famous horseman, Paul Revere hollered, “The Regulars are coming” throughout present day Somerville, Arlington and Medford. Gathering a sizable militia in Lexington, the rebels surprised the British the next morning. The “shot heard round the world” was fired and the War of Independence had begun. Only 60 seconds set the colonies on the course to separate from Britain and eventually become a world superpower.
With a lot less fanfare, a relatively small amount of time has changed the stock market. Let’s remember that, unlike history, we tend to forget many somewhat seismic shifts in the market. To most people, (except numbers nerds) stock market history is really not that interesting. But bear with me as I discuss a few great days on Wall Street.
It happened soon after the Dow Jones reached its lowest level following the 2007-2008 financial crisis. That revolting close was 6,547 on March 9, 2009. On March 23, 2009 the Dow shot up 6.84%. While the huge increase is impressive by itself, it followed increases 5.8% March 10th, 3.4% on March 12 and 2.5% on March 17. Yes, there were some losses between March 9 and March 23, 2009, but that is an awfully good run in a few short trading days. In fact, when the Dow closed at 7,776 on March 23, 2009, that represented an almost 19% gain in 10 trading days. Experts say this was the start of a great bull market. If you were on the sidelines because of fear or inertia, you lost out.
There is a lesson here for average investors. As many steep increases frequently occur at the start of bull markets and in short periods of time, it behooves you to always stay invested. You’ll lock in your losses if you sell when the market is low then buy when the market is high. Wicked Smart Investors win when the lightning strikes because they are always invested. There will be no horseman wearing a three-corner hat riding on Wall Street yelling, “The bull market is coming.” We only know that in retrospect.
You will see three-corner hats and other colonial era costumes at the Annual Lantern Event at the Old North Church on April 20. The placement of “One if by Land, two if by Sea,” a phrase coined by Henry Wadsworth Longfellow, will be reenacted.
