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7 Facts That Will Free You From the Fear of Stock Market Crashes

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7 Facts That Will Free You From a Fear of Stock Market Crashes

The current bull market in stocks is closing in on an astounding 10 years in length, making it the longest bull market run in all of modern history.

Largest Bull Markets

RankBull MarketLength
#109’-18’ (Current)115 months*
#2’90-‘00114 months
#3’49-‘5686 months
#4’74-‘8074 months
#5’82-‘8760 months

*As of September 2018

Understandably, this makes many people very nervous.

Everyone remembers the mayhem of 2008 – and with stock prices at all-time highs, the fear of a market meltdown is a valid concern for many investors.

How to Become Unshakeable

Today’s infographic is from Tony Robbins, leveraging data and talking points from his #1 Best Selling book Unshakeable: Your Financial Freedom Playbook, which is now available on paperback.

It leans on insights from the world’s top investors – like Ray Dalio and John Bogle – to present seven indisputable facts about market crashes, using clear patterns established over decades of data.

By understanding these seven facts, you’ll be able to prepare for the recurring seasons of the financial market, including winter, and it will help give you an enormous edge over even many sophisticated and experienced investors.

Seven Indisputable Facts

Here are the seven facts that will free you from a fear of stock market crashes:

Fact #1: On average, corrections happen once per year

For more than a century, the market has seen close to one correction (a decline of 10% or more) per year. In other words, corrections are a regular part of financial seasons – and you can expect to see as many corrections as birthdays throughout your life.

The average correction looks something like this:

  • 54 days long
  • 13.5% market decline
  • Occurs once per year

The uncertainty of a correction can prompt people to make big mistakes – but in reality, most corrections are over before you know it. If you hold on tight, it’s likely the storm will pass.

Fact #2: Fewer than 20% of all corrections turn into a bear market

When the stock market starts tumbling, it can be tempting to abandon ship by selling assets and moving into cash. However, doing so could be a big mistake.

You would likely be selling all of your assets at a low, right before the market rebounds!

Why? Fewer than 20% of corrections turn into bear markets. Put another way, 80% of corrections are just short breaks in otherwise intact bull markets – meaning that selling early would make you miss the rest of the upward trend.

Fact #3: Nobody can predict consistently whether the market will rise or fall

The media perpetuates a myth that, if you’re smart enough, you can predict the market’s moves and avoid its downdrafts.

But the reality is: no one can time the market.

During the current nine year bull market, there have been dozens of calls for stock market crashes from even very seasoned investors. None of these calls have come true, and if you’d have listened to these experts, you would have missed the upside.

The only value of stock forecasters is to make fortune-tellers look good.

– Warren Buffett

Fact #4: The market has always risen, despite short-term setbacks

Market drops are a very regular occurrence. For example, the S&P 500 – the main index that tracks the U.S. stock market – has fallen on average 14.2% at least one point each year between 1980-2015.

Like winter, these drops are a part of the market’s seasons. Over this same period of time, despite these temporary drops, the market ended up achieving a positive return 27 of 36 years. That’s 75% of the time!

Fact #5: Historically, bear markets have happened every three to five years

In the 115 year span between 1900-2015, there have been 34 bear markets.

But bear markets don’t last. Over that timeframe, they’ve varied in length from 45 days to 694 days, but on average they lasted about a year.

Fact #6: Bear markets become bull markets

Do you remember how fragile the world seemed in 2008 when banks were collapsing and the stock market was in free fall?

When you pictured the future, did it seem dark and dangerous? Or did it seem like the good times were just around the corner and the party was about to begin?

The fact is, once a bear market ends, the following 12 months can see crucial market gains.

The best opportunities come in times of maximum pessimism.

– John Templeton

Fact #7: The greatest danger is being out of the market

From 1996 through 2015, the S&P 500 returned an average of 8.2% a year.

But if you missed out on the top 10 trading days during that period, your returns dwindled to just 4.5% a year.

It gets worse! If you missed out on the top 20 trading days, your returns were just 2.1%.

And if you missed out on the top 30 trading days? Your returns vanished into thin air, falling all the way to zero!

You can’t win by sitting on the bench. You have to be in the game. To put it another way, fear isn’t rewarded. Courage is.

– Tony Robbins

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Technology

The World’s Top Car Manufacturers by Market Capitalization

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The World’s Top Car Manufacturers by Market Cap

View the high-resolution of the infographic by clicking here.

Ever since Apple and other Big Tech companies hit a market capitalization of $1 trillion, many sectors are revving to follow suit—including the automotive industry.

But among those car brands racing to reach this total valuation, some are closer to the finish line than others. This visualization uses data from Yahoo Finance to rank the world’s top car manufacturers by market capitalization.

What could this spell for the future of the automotive industry?

A special hat-tip to Brandon Knoblauch for compiling the original, regularly-updated spreadsheet.

The World’s Top Car Manufacturers

It’s clear one company is pulling far ahead of the pack. In the competition to clinch this coveted title, Tesla is the undoubted favorite so far.

The electric vehicle (EV) and clean energy company first became the world’s most valuable car manufacturer in June 2020, and shows no signs of slowing its trajectory.

RankCompanyMarket Cap (US$B)Country
#1Tesla$795.8🇺🇸 U.S.
#2Toyota$207.5🇯🇵 Japan
#3Volkswagen$96.7🇩🇪 Germany
#4BYD$92.7🇨🇳 China
#5NIO$89.5🇨🇳 China
#6Daimler$72.8🇩🇪 Germany
#7General Motors$71.3🇺🇸 U.S.
#8BMW$54.2🇩🇪 Germany
#9Stellantis$54.2🇳🇱 Netherlands
#10Ferrari$52.5🇮🇹 Italy
#11Honda$46.9🇯🇵 Japan
#12Hyundai$46.8🇰🇷 South Korea
#13SAIC$45.2🇨🇳 China
#14Geely$39.5🇨🇳 China
#15Ford$39.4🇺🇸 U.S.
#16Xpeng$33.9🇨🇳 China
#17Maruti Suzuki$33.1🇮🇳 India
#18Li Auto$29.5🇨🇳 China
#19Suzuki$23.7🇯🇵 Japan
#20Nissan$20.1🇯🇵 Japan
#21Subaru$15.2🇯🇵 Japan
#22Changan$14.6🇨🇳 China
#23Mahindra$13.9🇮🇳 India
#24Renault$12.0🇫🇷 France

All data as of January 15, 2021 (9:30AM PST)

Tesla’s competitive advantage comes as a result of its dedicated emphasis on research and development (R&D). In fact, many of its rivals have admitted that Tesla’s electronics far surpass their own—a teardown revealed that its batteries and AI chips are roughly six years ahead of other industry giants such as Toyota and Volkswagen.

The Green Revolution is Underway

The sheer growth of Tesla may spell the inevitability of a green revolution in the industry. Already, many major brands have followed in the company’s tracks, announcing their own ambitious plans to add more EVs to their vehicle line-ups.

Here’s how a selection of car manufacturers are embracing the electric future:

Toyota: Ranked #2

The second-most valuable car manufacturer in the world, Toyota is steadily ramping up its EV output. In 2020, it produced 10,000 EVs and plans to increase this to 30,000 in 2021.

Through this gradual increase, the company hopes to hit an expected target of 500,000 EVs by 2025. Toyota also aims to debut 10 new models internationally to achieve this goal.

Volkswagen: Ranked #3

By 2025, Volkswagen plans to invest $86 billion into digital and EV technologies. Considering the car manufacturer generates the most gross revenue per second of all automakers, it’s no wonder Volkswagen is looking to the future in order to keep such numbers up.

The company is also well-positioned to ride the wave of a potential consumer shift towards EVs in Europe. In response to the region’s strict emissions targets, Volkswagen upped its planned sales proportions for European hybrid and EV sales from 40% to 60% by 2030.

BYD and Nio: Ranked #4-5

China jumped on the electric bandwagon early. Eager to make its mark as a global leader in the emerging technology of lithium ion batteries (an essential component of any EV), the Chinese government handed out billions of dollars in subsidies—fueling the growths of domestic car manufacturers BYD and Nio alike.

BYD gained the interest and attention of its billionaire backer Warren Buffett, while Nio is China’s response to Tesla and an attempt to capture the EV market locally.

General Motors: Ranked #7

Also with a 2025 target year in mind, General Motors is investing $27 billion into electric and fully autonomous vehicles. That’s just the tip of the iceberg, too—the company also hopes to launch 30 new fully electric vehicles by the same year.

One particular factor is giving GM confidence: its new EV battery creations. They will be able to extend the range of its new EVs to 400 miles (644km) on a single charge, at a rate that rivals Tesla’s Model S.

Stellantis: Ranked #9

In a long-anticipated move, Fiat Chrysler and Peugeot S.A. finalized their merger into Stellantis N.V. on January 16, 2021.

With the combined forces and funds of a $52 billion deal, the new Dutch-based car manufacturer hopes to rival bigger brands and race even more quickly towards the electric shift.

Honda: Ranked #11

Speaking of fast-paced races, Honda has decided to bow out of future Formula One (F1) World Championships. As these competitions were usually a way for the company to show off its engineering prowess, the move was a surprising one.

However, there’s a noble reason behind this decision. Honda is choosing instead to focus on its commitment to become carbon neutral by 2050. To do so, it’ll be shifting its financial resources away from F1 and towards R&D into fuel cell vehicle (FCV) and battery EV (BEV) technologies.

Ford: Ranked #15

Ford knows exactly what its fans want. In that regard, its electrification plans begin with its most popular commercial cars, such as the Mustang Mach-E SUV. This is Ford’s major strategy for attracting new EV buyers, part of a larger $11.5 billion investment agenda into EVs through 2022.

While the car’s specs compare to Tesla’s Model Y, its engineers also drew from the iPhone and Netflix to incorporate an infotainment system and driver profiles to create a truly tech-first specimen.

Speeding into the Horizon

As more and more companies enter the racetrack, EV innovation across the entire industry may power the move to lower overall costs, extend the total range of vehicles, and put any other concerns by potential buyers to rest.

While Tesla is currently in the best position to become the first car manufacturer to reach the $1 trillion milestone, how long will it be for the others to catch up?

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Energy

The Periodic Table of Commodity Returns (2021 Edition)

Which commodity had the best returns in 2020? From gold to oil, we show how commodity price performance stacks up over the last decade.

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The Periodic Table of Commodity Returns (2011-2020)

Being a commodity investor can feel like riding a roller coaster.

Take silver. Typically known for sharp, idiosyncratic price movements, it faced double-digit declines in the first half of the decade, falling over 35% in just 2013 alone. By contrast, it jumped over 47% in 2020. Similarly, oil, corn, and others witnessed either steep declines or rapid gains.

The above graphic from U.S. Global Investors traces 10 years of commodity price performance, highlighting 14 different commodities and their annual ranking over the years.

Commodity Price Performance, From Best to Worst

Which commodities were the top performers in 2020?

The aforementioned silver tripled its returns year-over-year, climbing 47.9% in 2020. In July, the metal actually experienced its strongest month since 1979.

RankCommodity
Return (2020)
Return (2019)
Return (2018)
1Silver47.9%15.2%-8.5%
2Copper26.0%3.4%-17.5%
3Palladium25.9%54.2%18.6%
4Gold25.1%18.3%-1.6%
5Corn24.8%3.4%6.9%
6Zinc19.7%-9.5%-24.5%
7Nickel18.7%31.6%-16.5%
8Gas16.0%-25.5%-0.4%
9Wheat14.6%11.0%17.9%
10Platinum10.9%21.5%-14.5%
11Aluminum10.8%-4.4%-17.4%
12Lead3.3%-4.7%-19.2%
13Coal-1.3%-18.0%-22.2%
14Oil-20.5%34.5%-24.8%

Along with silver, at least seven other commodities had stronger returns than the S&P 500 in 2020, which closed off the year with 16.3% gains. This included copper (26.0%), palladium (25.9%), gold (25.1%) and corn (24.8%).

Interestingly, copper prices moved in an unconventional pattern compared to gold in 2020. Often, investors rush to gold in uncertain economic climates, while sectors such as construction and manufacturing—which both rely heavily on copper—tend to decline. Instead, both copper and gold saw their prices rise in conjunction.

Nowadays, copper is also a vital material in electric vehicles (EVs), with recent demand for EVs also influencing the price of copper.

Silver Linings

As investors flocked to safety, silver’s price reached heights not seen since 2010.

The massive scale of monetary and fiscal stimulus led to inflationary fears, also boosting the price of silver. How does this compare to its returns over the last decade?

silver returns 2011-2020

In 2013, silver crashed over 35% as confidence grew in global markets. By contrast, in 2016, the Brexit referendum stirred uncertainty in global markets. Investors allocated money in silver, and prices shifted upwards.

As Gold as the Hills

Like silver, market uncertainty has historically boosted the price of gold.

What else contributed to gold’s rise?

  • U.S. debt continues to climb, pushing down confidence in the U.S. dollar
  • A weaker U.S. dollar makes gold cheaper for other countries to buy
  • Low interest rates kept the returns of other safe haven assets low, making gold more attractive by comparison

Here’s how the price of gold has changed in recent years.

gold returns 2011-2020

Gold faced its steepest recent declines in 2013, when the Federal Reserve bank discussed tapering down its quantitative easing program in light of economic recovery.

Hitting the Brakes On Oil

Oil suffered the worst commodity price performance in 2020, with -20.5% returns.

For the first time in history, oil prices went negative as demand plummeted. To limit its oversupply, oil producers shrunk investment, closed wells, and turned off valves. Unfortunately, many companies still faced bankruptcies. By November, 45 oil producers had proceeded with bankruptcy filings year-to-date.

This stood in stark contrast to 2019, when prices soared 34.5%.

oil returns 2011-2020

As is custom for oil, prices see-sawed over the decade. In 2016 and 2019, it witnessed gains of over 30%. However, like 2020, in 2014 it saw huge losses due to an oversupply of global petroleum.

In 2020, total production cuts hit 7.2 million barrels a day in December, equal to 7% of global demand, in response to COVID-19.

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