A Little Stock Market History – January 1991

My last post highlighted the fact that the Dow Jones Industrial Average is off to its worst start since 1991. The article I hightlighted failed to mention what actually happened to the Dow during the month of January, 1991. Although the Dow started the month down 5.01%, it actually ended the month UP nearly 4%:

Anyone recall the significant event that occured in January 1991?

Answer: The Persian Gulf War was authorized on January 12, 1991. Here’s a list of some of the other significant events from January 1991.

Bottom line: Worrying about doom and gloom is a waste of time and can even harm your finances if you allow your emotions to dictate your investment strategy. If you are worried about a recession, then take some steps to protect yourself by diversifying your portfolio. (Notice I didn’t tell you to sell everything and put it in cash)

4 thoughts on “A Little Stock Market History – January 1991”

  1. Believe it or not, tacked to the wall of my garage worbench is an article from USA Today January 10, 1991 describing the events of the previous day. The title reads: “‘Regrettably’: The word that started a frenzy.”

    I will summarize the article in a few sentences of my own:

    After having held marathon negotiating sessions with Iraq, James Baker held a press conference on Wednesday afternoon. At exactly 1:56:44 P.M., he started his 5th sentence with the word “regrettably”, which set off an immediate fury of sell orders in stocks and bonds, and buy orders in oil and gold. Traders never even waited for the rest of the sentence, let alone the rest of conference. In less than 10 minutes, oil futures rose $7.20 — more than a 30% increase in 10 minutes!

    Of course, while the fastest of the traders made a lot of money that day, by the end of the month, everything had reversed and then some. This was an important lesson to me and one I did not soon forget…

  2. I usally don’t mind seeing the stock market go down. I am lucky enough to be fairly young so when the market goes down I am buying everything on sale. If I was older I wouldn’t like it so much, but I guess that’s why you are supposed to have less stocks when you are older.

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