Wall Street’s Rearview Mirror: Lessons from the 2016 Market for Today’s Investors
In investing, looking back at the rearview mirror of past market conditions can provide valuable insights for today’s investors. One such period is the 2016 market, which was marked by significant
volatility
,
uncertainty
, and
event-driven
events that offer important lessons.
The Brexit referendum, held on June 23, 2016, was a
seminal event
that led to heightened volatility in global markets. The unexpected outcome – the United Kingdom voted to leave the European Union (EU) – caused a
sharp sell-off
in global equities, particularly those with significant exposure to Europe. However, the markets soon rebounded as investors reassessed their positions and adjusted to the new reality.
Another notable event in 2016 was the U.S. Presidential Election, which took place on November 8, 2016. The election of Donald J. Trump as the next U.S. President resulted in a
surge
in markets, driven by expectations of pro-business policies and tax reforms. The S&P 500 index rallied by over 5% within two days of the election result.
The 2016 market also serves as a reminder that
market crashes
are often followed by strong rebound rallies. The
global financial crisis
of 2008, which led to a significant market downturn, was followed by a robust rebound in 2009. Similarly, the
flash crash
of August 24, 2015, where markets experienced an intraday decline of over 10%, was followed by a quick recovery. These instances illustrate the cyclical
nature of markets and underscore the importance of maintaining a long-term perspective.