Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: [email protected]
It’s been chaos in the markets — more like a Netflix thriller than a finance report. One day it’s panic, the next euphoria, then straight back to fear. Headlines screamed meltdown, bloodbath, and $9 trillion wiped off the boards. One of the sharpest plunges in history was followed by a record-breaking surge — only to be flattened again by yet another slump. Volatility is back with a vengeance, and investors are gripping their seats.
I spent the week giving talks to well-resourced senior citizens on Sydney’s North Shore, reminding them I’ve been investing for 60 years — and that crashes are nothing new.
One of the earliest – and most dramatic – crashes of my investing life came in 1974 when a severe credit squeeze hit the country. Interest rates soared, inflation was rampant, and banks virtually stopped lending. It became almost impossible to get a loan, paralysing the property market and strangling business activity.
The next was 1987, when Australia was swept up in the global share market crash known as Black Monday. The All Ordinaries plunged more than 40% in just a few weeks, wiping out years of gains and decimating retirement savings. The index fell from over 2300 to under 1400 almost overnight.
Just three years later, in 1990, it was the property market that took the hit. In Melbourne, a commercial building once valued at $60 million was suddenly worth $6 million. Over-leveraged investors were wiped out; banks scrambled to recover loans now drastically under-secured. The crash sparked a broader recession.
Fast forward to 2000, and while we dodged the predicted Y2K bullet, the dot-com crash lasted until 2002. The NASDAQ fell a staggering 78 per cent as internet hype gave way to harsh reality. Hundreds of tech companies vanished – but a few survivors, like Amazon and Apple, emerged stronger and went on to become juggernauts. It was a classic case of short-term pain leading to long-term transformation.
The Global Financial Crisis of 2008 was the next great storm. I remember walking through Threadneedle Street in London at the height of the panic, watching stunned faces and posters showing burning Ferraris declaring, ‘Capitalism is finished.; Banks collapsed, credit markets froze, and Australia braced for impact. But we pulled through.
Then, in early 2020, the COVID-19 pandemic hit — and lockdowns froze economies. Markets fell off a cliff: the All Ordinaries dropped 37 per cent in just a few weeks; super balances shrank; businesses shut their doors; and fear spread like wildfire. Yet, just as swiftly, recovery began – markets bounced back long before the headlines did.
Each of these episodes felt, at the time, like the end of the world. And yet here we are — still standing, still investing, still navigating uncertainty. Volatility isn’t a flaw in the financial system; it’s a feature. History reminds us that even the deepest valleys are eventually followed by recovery.
Let me finish with a Chinese fable — a perfect parable for the times we’re living through.
A farmer’s horse ran away, and the neighbours came to commiserate.
‘How terrible,’ they said.
The farmer replied, ‘Maybe so, maybe not.’
A week later, the horse returned with three wild horses.
‘How wonderful,’ said the neighbours.
‘Maybe so, maybe not,’ said the farmer.
Soon after, the farmer’s son tried to tame one, was thrown, and broke his leg.
‘What a disaster!’ cried the neighbours.
‘Maybe so, maybe not,’ said the farmer.
Then the army came through the village, conscripting every able young man — but left the injured son behind.
‘How lucky!’ said the neighbours.
And once again, the farmer replied, ‘Maybe so, maybe not.’
The fable leaves us with the only question that matters: where does the story end?
About the author: Noel Whittaker, AM, is the author of Wills, death & taxes made simple and numerous other books on personal finance. An international bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker, Noel Whittaker is one of the world’s foremost authorities on personal finance. Connect via Twitter or email ([email protected]). You can shop his personal finance books here.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Always seek professional advice that takes into account your personal circumstances before making any financial decisions. The views expressed in this publication are those of the author.
