The news from last year was horrible. The COVID-19 pandemic has affected tens of millions of people worldwide and caused hundreds of thousands of deaths. Secondary aftershocks in the 2020 presidential election continued to cause unrest, culminating in violence on the U.S. Capitol on Wednesday. It is a scary time for the country.
And yet, in the eyes of many, Wall Street appears to be in its own bubble, isolated from the violent upheaval in the nation’s capital. The stock markets jumped to historical records on Thursday morning, continuing a bullish wave that persisted during an irritatingly long coronavirus crisis, months of economic suffering and growing division not only in the US, but around the world.
This disconnect between Main Street and the investor world is worrying. If recent events have made you angry, upset, discouraged, scared or just ready to throw your hands up and hide – believe me, I understand. I am feeling all these emotions as I think about what my country is going through now.
Image source: Getty Images.
But one of the basic principles that unite Americans is the idea that we can all aspire to build a better future for ourselves and our loved ones. Investing is an essential element in finding the financial success necessary to achieve that dream. I think it is more important than ever to now have and follow a long-term financial plan that includes equity investment. Our common goal of achieving financial independence is something we can share, even when we have disagreements in other areas.
Overcoming the challenges of history, one by one
This is not the first time that Americans have faced difficult times. As my former Motley Fool colleague and best-selling author Morgan Housel wrote last year, we always find a way to overcome our deepest difficulties. Quoting a Depression-era journalist and his experiences from arguably the most economically devastating era in the history of the United States, Housel’s lesson was simple: let’s get over it.
The steady growth of the United States stock market over more than a century has been one of the biggest drivers of economic prosperity in the world. It has been the envy of other countries around the world, many of whom have not been able to duplicate their success, despite their best efforts.
During this period, we went through almost every type of crisis. The Great Depression created massive unemployment, but the nation found a way to put people to work. World War II threatened the ideals of the United States and much of Western Europe, but sacrifice and hard work led to a victory that set the stage for a massive economic boom.
After the assassination of President John F. Kennedy, many feared that the resulting confusion would lead to an attack by Cold War enemies in the United States, and the stock markets fell sharply with the news. Even so, there was an orderly power transition, and markets continued to grow to historical levels for several years after the event.
Even large-scale violence on our own soil has proved no match for the resilience of markets. The 9/11 attacks closed the market for days and left the nation shocked, but unyielding in its determination to recover. Investors have seen the results in monumental stock market gains over the past 20 years.
We will get over it again
Each of these events put our collective determination to the test. Each time, we emerged stronger.
This strength was shown in the success of the stock market. Even when some sectors of the economy were under pressure, others took the day off and found ways to prosper. Over the years, stock markets have continued their relentless advance.
In addition, these experiences showed the true value of high-quality businesses. Companies that had strong leadership, innovative products and services, loyal customers and a commitment to doing their best reached the top. Their shares fared even better than the broader market, and those who were bold enough to invest in their shares enjoyed the benefits.
Image source: Getty Images
The stock market will continue to rely on our ability to come together for common goals. One of the reasons that US stocks have performed so well throughout history is that the world has respected the nation’s commitment to political stability. The United States’ system of laws and institutions has been the pride of the world and has endured and adapted for more than two centuries. We still have work to do to ensure that the system continues to adapt and ensure everyone’s benefit.
One thing is certain: we will overcome this. Part of how we will do this is finding common ground. The promise of financial freedom for everyone is something we can all rely on. As investors, we are not just investing in stocks. We are investing in companies and our peers. We are investing in a better future. And now, a better future is the most important thing that we can strive to achieve.