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Date: 2020-10-30 Page is: DBtxt001.php L0700-PP-Investments
PROGRESS AND PERFORMANCE
INVESTMENTS

History of Black Swan Events
The main takeaway from this infographic is that investors has realized huge financial growth over the past 60 years. The big question is whether or not this has been a reasonable outcome. The underlying social, environmental and economic reality suggests that the markets are getting it wrong.
  • 1967 ... Israel ... the 6 day war
  • 1973 ... the Arab oil embargo
  • 1979 ... the Iranian hostage crisis
  • 1987 ... Black Monday ... Savings and Loan Crisis
  • 1991 ... First Gulf War
  • 2000 ... dot.com bust
  • 2001 ... 9/11 attacks
  • 2002 ... SARS health crisis
  • 2007 ... Global Financial Crisis
  • 2011 ... Intervention in Libya
  • 2016 ... Bexit vote
  • 2020 ... Covid19 health crisis

Rebounds from Past Bear Markets
1929 ... 25 years to rebound
This was an 86.6% drop ... and it is entirely possible that it might not have ever recovered if there had not been a World War!
1973-1974 ... 7.5 years to rebound
This was a 45.9% loss which took 7.5 years to recover. In some ways, however, the oil shock which caused the drop was never resolved.
2000-2002 ... 7.1 years to rebound
This was a 46.1% loss which also took around 7 years to recover. This was the burst of the 'dot.com' bubble. The economic damage was mainly financial.
2007-2009 ... 5.1 years to rebound
This was a 56.8% loss which took around 5.1 years to recover. This was the 'Great Recession'. There was massive social damage in addition to economic damage.
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The Coronavirus Crash
The decline in the stock market during the early part of 2020 has been the largest point drop in the history of US exchanges. There is no data yet that gives any indication of what rebound, if any, there will be when the coronavirus crisis recedes.
The massive drop on stock markets from mid-February to mid-March 2020 has surprised many in the financial community, but it probably reflects the systemic overvaluation of financial markets that has been building since the 1980s. At its roots the reason for this overvaluation is the out-dated accounting convention that externalities need not be taken into account when the (financial) performance of a corporate organization is computed, When social impact and environmental impact associated with corporate activity are taken into consideration, the true value of companies have been substantially below stock market valuations.

The economic shock arising in the wake of the coronavirus pandemic might well be the catalyst for an overdue rethink of how corporate valuation is addressed. This has the potential to be the most meaningful change in socio-enviro-economic behavior since the end of WWII



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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right. TVM is a 'big idea' that has the potential to be a game changer leveling the playing field so the wealth and power is shared on a more reasonable basis between people who work for a living and those that own the economy and the levers of power. In order to be effective, it cannot be funded in the conventional way with a for profit business plan, but absolutely must remain an open access initiative.
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Copyright © 2005-2020 Peter Burgess. All rights reserved.