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
|#1||09’-18’ (Current)||115 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
All the World’s Coal Power Plants in One Map
Today’s interactive map shows all of the world’s coal power plants, plotted by capacity and carbon emissions from 2000 until 2018.
All The World’s Coal Power Plants in One Map
The use of coal for fuel dates back thousands of years.
Demand for the energy source really started to soar during the Industrial Revolution, and it continues to power some of the world’s largest economies today. However, as the clean energy revolution heats up, will coal continue to be a viable option?
Today’s data visualization from Carbon Brief maps the changing number of global coal power plants operating between 2000 and 2018. The interactive timeline pulls from the Global Coal Plant Tracker’s latest data and features around 10,000 retired, operating, and planned coal units, totaling close to 3,000 gigawatts (GW) of capacity across 95 countries.
On the map, each circular icon’s size represents each plant’s coal capacity in megawatts (MW). The data also highlights the type of coal burned and the CO₂ emissions produced as a result.
A Precarious Power Source
Throughout its history, coal has been used for everything from domestic heating and steel manufacturing, to railways, gas works, and electricity. The fuel played a pivotal role in powering economic development, and had a promising future with a flurry of plant openings.
However, in 2016, coal output dropped by 231 million tons of oil equivalent (Mtoe). Combined with a rapid slowdown of new plants being built, total coal units operating around the world fell for the first time in 2018.
With the remaining fleet of plants operating fewer hours than ever, plant closures have been triggered in South Africa, India, and China—steadily eroding coal’s bottom line. Industry trends have also forced a wave of coal companies to recently declare bankruptcy, including giants such as Peabody Energy and Alpha Natural.
Can Coal Compete with Clean Energy?
Today, coal is experiencing fierce competition from low-priced natural gas and ever-cheaper renewable power—most notably from wind and solar. Further, solar power costs will continue to decline each year and be cut in half by 2020, relative to 2015 figures.
Natural gas surpassed coal as America’s #1 power source in 2016, with the total share of power generated from coal tumbling from 45% in 2010 to 28% in 2018. By next year, the role of coal is expected to be further reduced to 24% of the mix.
On the interactive visualization, the decline of coal is especially evident in 2018 as plant closures sweep across the map. The chart shows how several countries, notably China and India, have been closing many hundreds of smaller, older, and less efficient units, but replacing them with larger and more efficient models.
As of today, China retains the largest fleet of coal plants, consuming a staggering 45% of the world’s coal.
Use the above slider to see the difference between China’s coal plants in 2000 with projected future capacity.
Towards a New Reality
Coal is the most carbon intensive fossil fuel, and for every tonne of coal burned there are approximately 2.5 tonnes of carbon emissions. The International Energy Agency states that all unabated coal must be phased out within a few decades if global warming is to be limited.
Despite these warnings, global coal demand is set to remain stable for the next five years, with declines in the U.S. and Europe offset by immediate growth in India and China. The latter are the main players in the global coal market, but will eventually see a gradual decline in demand as they move away from industrialization.
A total phaseout of unabated coal is planned by 14 of the world’s 78 coal-powered countries, with many of these countries working to convert coal capacity to natural gas.
As the price of premium solar generation drops steadily, and innovation in renewable energy technology becomes more prominent, the world is shifting its attention to a clean energy economy. A global revival of coal looks less and less likely—and the fossil fuel might very well one day become obsolete.
Editor’s Note: The map uses WebGL and will not work on some older browsers. The map may also fail to load if you are using an ad-blocking browser plugin.
The Big Pharma Takeover of Medical Cannabis
The Big Pharma industry is entering the cannabis space, by swapping patients for patents. But what are the impacts of such a takeover?
The Big Pharma Takeover of Medical Cannabis
As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless companies.
Today’s infographic comes to us from CB2 Insights, and explores how and why the notorious Big Pharma are interested in the nascent cannabis industry.
Who are “Big Pharma”?
The term refers to some of the largest pharmaceutical companies in the world, considered especially influential as a group. To give a sense of their sheer size, the market cap of the top 10 Big Pharma companies is $1.7 trillion—Johnson & Johnson being the largest, with a market capitalization of $374 billion.
So far, Big Pharma has watched the cannabis industry from the sidelines, deterred by regulatory concerns. What we are seeing now is the sleeping giant’s takeover slowly intensifying as more patents, partnerships, and sponsored clinical trials come to fruition.
Could Cannabis be Sold Over the Counter?
The cannabis plant has been used in medicine for 6,000 years. However, there is still considerable debate around the role it plays in healthcare today. There are currently almost 400 active and completed clinical trials worldwide surrounding cannabidiol (CBD), a type of cannabinoid that makes up 40% of the cannabis plant’s extract.
Cannabis relies on CBD’s therapeutic properties, and recent studies suggest it may be useful in combating a variety of health conditions, such as:
- Multiple sclerosis
- Cancer side effects
As of 2019, 33 states and the District of Columbia have legalized cannabis for medical use. Its potential for pain management has led some experts to recommend it as an alternative to addictive painkillers, with one study of 13 states showing opiate-related deaths decreasing by over 33% in the six years since medical cannabis was legalized.
As the industry evolves, data is becoming increasingly important in understanding the potential of cannabis—both as a viable medical treatment, and as a recreational product. The shift away from anecdotal evidence towards big data will inform future policies, and give rise to a new era of consumer education.
Big Pharma’s Foray into Cannabis
Further legalization of cannabis will challenge Big Pharma’s bottom line, and poach more than $4 billion from pharma sales annually. In fact, medical cannabis sales are projected to reach $5.9 billion in 2019, from an estimated 24 million patients.
Seven of Canada’s top 10 cannabis patent holders are major multinational pharmaceutical companies, a trend that is not unique to Canada.
|Company Rank||🇨🇦 Canadian Patents||Company Rank||🇺🇸 U.S. Patents|
|1. Novartis||21||1. Abbvie||59|
|2. Pfizer||14||2. Sanofie||39|
|3. GW Pharmaceuticals||13||3. Merck||35|
|4. Ericsson||13||4. Bristol-Myers Squibb||34|
|5. Merck||11||5. GW Pharmaceuticals||28|
|6. Solvay Pharmaceuticals||7||6. Pfizer||25|
|7. Kao Corporation||7||7. Hebrew University of Jerusalem||19|
|8. Ogeda SA||7||8. Roche||17|
|9. Sanofi||6||9. University of Connecticut||16|
|10. University of Connecticut||6||10. U.S. Health and Human Services||13|
It comes as no surprise that many pharmaceutical giants have already formed strong partnerships with cannabis companies, such as Novartis and Tilray, who will develop and distribute medical cannabis together in legal jurisdictions around the world.
Data is the Missing Link
While the body of knowledge about the many uses of cannabis continue to grow, clinical evidence is key for widespread adoption.
Products backed by data will be a defining criteria for major companies to come into the market en masse. And ultimately, Big Pharma’s entry could accelerate public understanding and confidence in cannabis as a viable option for a range of ailments, and mark the next major milestone for the industry.
Markets7 months ago
The Jeff Bezos Empire in One Giant Chart
Maps9 months ago
Mercator Misconceptions: Clever Map Shows the True Size of Countries
Advertising6 months ago
Meet Generation Z: The Newest Member to the Workforce
Misc9 months ago
24 Cognitive Biases That Are Warping Your Perception of Reality
Advertising5 months ago
How the Tech Giants Make Their Billions
Technology8 months ago
The 20 Internet Giants That Rule the Web
Chart of the Week7 months ago
Chart: The World’s Largest 10 Economies in 2030
Environment6 months ago
The World’s 25 Largest Lakes, Side by Side