Market effect of a Government Shutdown

1a Dow decline illustration calc and JPEG instructionsThe past is not prologue for the future, however it is instructive to see how markets were affected by past government shutdowns.

This USAToday graphic, Item # 6, shows the Dow index did go down. However, it also shows a recovery after the shutdown ended.

The chart may help put any downward activity into a larger perspective. Whether the government shuts down, or not, people seem to always have a reason to be fearful these days when it comes to investing, saving, or planning and reaching their goals and aspirations.

Recall that there are always “walls of worry” for the markets to climb – news that people fear and thus trade in the markets accordingly. However, the trend over the long term has been growth. If your goal is long term, invest accordingly. If your goal in short term, you shouldn’t be invested – rather that money should be saved. (Difference between saving and investing).

Moral of the story: Learn the difference between what you can control and what you can’t control (Brian Tracy quote). Work on what you can control. Forget about what you can’t. You can control your savings and spending. You can control your exposure to market volatility. You can’t control the markets since those are the sum of everyone’s actions, including your own.

PS. Long term? The Dow closed on Jan 5th 1996 (last shut down ended that weekend) at 5,181.43 (almost 18 years ago – and a lot has happened since then!). Compare that to the chart above. You probably have as many years yet to go- and a lot of history yet to witness.

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