February 19: Don’t Forget What You’ve Already Been Through

February 19 isn’t that memorable of a day for most people. And why should it be? This month has already brought us Valentine’s Day, Ash Wednesday, President’s Day, and the month includes many other celebratory dates. And while February 19 isn’t a day to be celebrated, at least for long-term investors, it should be a day that we consider on a regular basis if for no other reason than to remember what we’ve been through.

On February 19, 2020, the S&P 500 Index closed at 3,386.15, which was its all-time high at the time. This was its pre-COVID high before the pandemic sell-off began. What’s your memory of this episode?  What’s your memory of the COVID episode in general? My hunch is that for many people most of it, especially how the markets reacted, is ancient history. Human nature being what it is, the impulse to want to, or even need to move on is very strong.

I think this is normal behavior, but I know the last thing a long-term investor should ever want to do is to wipe the economic and financial crises brought about by COVID from their memory. Instead, I recommend prominently highlighting February 19 on your calendar like any other important date. Circle it. Outline the date in red. Put a big X through the date and remember the stock markets response to COVID in every detail because we need to shockproof ourselves for the future.

If there ever was an enduring plea of humanity when it comes to periods of stock market collapse it would have to be “this time is different”. And yes, the causes, the depths of a market collapse, and the length of time for the market to recover may all be different, the truth is that these situations are relatively common. Consider this S&P 500 data below provided by Yardeni Research.

Going all the way back to 1928, it shows twenty-two instances where the market declined 20% or more and indicates the number of days it took to bottom out and begin to recover – which it always has.

In the period since 1950, some gut-wrenching event has put the market into sharp decline about every five years or so with about one out of every three dollars seemingly wiped out. Interestingly, the COVID collapse was “different” in a very meaningful way when just looking at the number of days it took the market to recover. No one could have predicted what companies might have earned during this period or what steps may be taken to get the economy up and running again. Still, in 33 days the market dropped 34%, which hadn’t happened that fast and that far since 1929.

We all know that the government intervened like never before and brought about a deluge of fiscal and monetary stimulus. And with a recession that lasted about three months, the economy quickly changed course. Almost six months later the S&P 500 broke into new high ground.

As I write today, the market is just under 6,900. It’s more than doubled since the February 19, 2020, peak. This is even despite a 25% decline that lasted almost 10 months in 2022. Amazingly, the index has compounded at 15% annually these past six years.

It’s my belief that most people don’t remember the facts of this situation. And by going back down memory lane in this essay, I’m hoping to empower anyone who comes across it to weather the many crises that are sure to come. Crises, lest there be any misunderstanding, which will look nothing like COVID. Which, as you might remember, looked nothing like Black Monday of 1987, or the Global Financial Crisis in 2008 and 2009. Which looked nothing like the dot-com bubble that burst in 2000, which looked nothing like the Enron scandal, …and so on.

It is important to remind ourselves that we’ve weathered severe market storms in the past. And whether it’s financial journalism’s daily reminder that the sky is about to fall in some form or fashion, or if in fact, we’re in one of those panic-filled periods like those listed in the chart above, we need some way of mentally pulling ourselves out of it so we can gain perspective. I recommend asking yourself this question – “Why have stock prices risen over time?”

The simple answer is because superior companies like those listed on the S&P 500 Index have increased their earnings. If we went back just over fifty years to the end of 1972, a period that encompasses the three great bear markets of the last half century, all of which were driven by very real crises, what’s happened to the index and its earnings?

Yahoo Finance shows that the S&P 500 ended 1972 at 118 with earnings of $6.17. It closed out in 2025 at approximately 4,770 with earnings per share of about $234.  That’s 40 times increase in the index and 38 times increase in the earnings.

So, why have earnings risen so much? For certain, the fact that the U.S. population rose by 50% over this time period helps, but the big things were productivity and innovation. Americans increased their productivity more than two and half times in real, inflation-adjusted terms. But the largest factor by far was innovation as eight out of ten of the most valuable companies in the S&P 500 today didn’t even exist in 1972. The indexes dividend growth over this period is a similar story with it increasing about twenty-three times which, interestingly, greatly outpaced the increase of consumer prices which only grew about seven times.

And to continue adding to our perspective to strengthen our resolve in down markets, if there’s one key idea that’s most valuable to hold on to in declining markets, it’s this. As stock prices decline price and value move in opposite directions. As prices fall, things seem to be getting “worse.” But historically, declining prices have signaled better value in every aspect of our economic lives…except one.

There’s an old Wall Street saying that say’s “The stock exchange is the only place where, when they have a big sale, everyone runs out of the store.” And it’s true. Everything people buy (cars, clothes, tuna fish, etc.) when it goes on sale, we see the value going up and we want to buy more.  But when it comes to investing in the stock market, unfortunately, people most often do the exact opposite.

Again, remember what you’ve been through. The shares of even America’s finest companies have experienced frequent declines in price. Some of these declines, driven by very real crises, have been quite significant. But despite these setbacks, leading U.S. companies have continued to grow their earnings and dividends strongly over time.

Their shares have overcome even the deepest declines more rapidly than one might expect – gone on to new heights.

And if the ageless lament that blinds investors in down markets is “This time is different” let me offer a phrase that is more powerful and one that better captures the essence of all investing wisdom – “This too shall pass”. And you know its true because you’ve already been through this before.

If you’d like help thinking through how this topic applies to your situation, I’m always happy to have a conversation. And if you’d like future articles like this delivered by email, I share ongoing insights on retirement, investing, taxes, and life in Alabama and Georgia on Substack. You can subscribe there anytime.