On October 19th, 1987, known as Black Monday, the stock market went down 23% in a single day. You can see this sudden decline in the graph above where Black Monday is shown from red dot to red dot. A stock market drop like this, called a bear market, looks drastic when viewed in isolation.
A 23% loss in investment value in a single day is drastic. New, inexperienced investors sold their stock market holdings and bailed out of the stock market, many never to return.
Yet those who understand how the stock markets work did not experience a 23% loss. Experienced investors know that bear markets, such as Black Monday, will occur every few years in the stock market.
Experienced investors with a long term view chose to stay invested, despite the fear and uncertainty that Black Monday caused. How did that choice work out for them? The graphs on the next few pages will show you how they fared.