Market Volatility
Making sense of sharemarkets, your super and investments in 2009.
What goes down, should go up
The good news is that although the market falls in 08/09 were severe, as professional investors we know that markets and economies all move in growth cycles – from boom periods, to events like the global financial crisis. Think about previous recessions and market downturns – 1987, 1990, 1994 and 2002. Each of these periods has been followed by a long period of sustained growth. Of course, the past performance of sharemarkets isn't an accurate way of predicting what will happen in the future, but based on history, we can be reasonably certain that markets will again recover in time - as seen in the example below.
Major market events and the Australian sharemarket
| Year | Event | Annual return % | Average return for next 5 years % |
|---|---|---|---|
| 1987 | Wall St Crash |
-7.9 |
+9.9 |
| 1990 | Keating recession 'We had to have' |
-7.5 |
+17.8 |
| 1994 | Bond Market Crash |
-8.7 |
+14.6 |
| 2002 | The 'Tech Wreck' |
-8.1 |
+21.1 |
| 2008 | Global Financial Crisis |
-43.0 |
- |
Source: S&P/ASX All Ordinaries Index to April 2000, S&P/ASX 300 Index from May 2000. Past performance is not a reliable indicator of future performance.
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