It's (NOT) the End of the World as We Know It

Jesse W. Hurst, CFP^®, AIF^®

May 19, 2025

"It's the End of the World as We Know It (And I Feel Fine)" is a 1987 song by alternative rock band R.E.M. and is the second single from their fifth studio album Document. Despite its popularity and recognition, it peaked at only number 69 in the United States. This high-energy song kicks off a flurry of lyrics with the following introduction:

… That's great, it starts with an earthquake

Birds and snakes, and aeroplanes

And Lenny Bruce is not afraid

Source: Wikipedia

Below is a YouTube link to the song for those of you who have never seen the video or would simply like an energetic kickoff to your day.

https://www.youtube.com/watch?v=Z0GFRcFm-aY

Just a few weeks after starting my career as a financial advisor in August 1987, I was greeted with the first of many, end of the worlds to come, when the stock market melted down on October 19, 1987, a day known as "Black Monday," when the Dow Jones Industrial Average dropped 22.6 percent. Having only been in the business for approximately 6 weeks, I was proud to say that none of my clients lost any money on that fateful day. However, this is largely because I was so new to the business that I didn't really have any clients yet.

Source: Jesse’s Desk/iPhone

This was a fascinating introduction to my new career, and I ultimately lived through many future crises, each of which the media would declare the latest “end of the world.” These include two Persian Gulf wars, the collapse of Long Term Capital Management, the dot.com bubble bursting, 9/11, the Great Financial Crisis, the fiscal cliff, and the COVID-19 pandemic. These were the major headline-grabbing events of the last 35 years. In addition, numerous minor incidents created shorter periods of panic.

The most important thing to remember about each of these crises is that, of course, despite the negative headlines from the media, social media, and cable news networks, THE WORLD DIDN’T END!!

This brings us to recent events related to the economic uncertainty caused by the Trump administration's rollout, implementation, and communication of its trade and tariff plan. The depth and severity of the tariffs, especially those against our closest allies and neighbors, surprised most economists and market strategists. Markets hate uncertainty, and as a result, U.S. stock indexes dropped nearly 20% or more in just a few weeks, the fastest market downturn we have seen since the COVID-19 outbreak in February and March of 2020.

Subsequent to the initial announcement, various parts of the plan have been temporarily paused, and other products have had exemptions provided. In addition, Treasury Secretary Scott Bessant and his team have made significant progress on brokering trade deals with some of our most important partners and allies, including India, Great Britain, South Korea, Vietnam, and Europe. The successful completion of these trade deals would provide more clarity and give the companies that operate in this environment more certainty to pursue their future business plans and opportunities.

What is most important for investors to remember is that despite all the various crises that were supposed to bring forth the next end of the world, corporate America did what it does best: adjust, create, and innovate! This has fostered an environment where great American companies continue to manage against the latest challenges that may present themselves and continue to develop new products and services that Americans, and consumers around the globe want to purchase. This, in turn, has led to increasing corporate profits and rising stock prices despite the various crises and headwinds they faced.

The second thing investors need to keep in mind is that selling assets after prices have dropped not only locks in losses but also precludes you from participating in whatever rebound in asset prices eventually follows. As you can see in the chart below from our friends at Capital Group and American Funds, over the last nearly 100 years, anytime the stock market has dropped more than 15%, there has been a subsequent rebound in stock prices. You will note that typically, the bigger the drop, the bigger the rebound. It is somewhat akin to pushing a beach ball underwater. The further down you push the beach ball, the further up it shoots when you release it.

Recently, investment manager and market strategist David Bahsen, CEO of the Bahsen Group, stated something that I could not agree more strongly with in one of his daily reports. Instead of trying to paraphrase his message, I will share it with you below, giving him full credit for the message and its wisdom:

“I do not know if the worst of this market drama is behind us or not – it very well may be. But I do know that any time a traumatic market event takes place, it is well worth re-visiting my gospel of investing for the end of the world (taught to me by the great Howard Marks):

(1) We can’t predict the end of the world

(2) We wouldn’t know what to do even if we knew the world was ending

(3) Anything one could do to prepare for the end of the world would be disastrous if the world didn’t end up ending

(4) And you may have noticed, the world usually doesn’t end.”

… It's the end of the world as we know it

It's the end of the world as we know it.

It's the end of the world as we know it, and I feel fine.

Despite the lyrics from R.E.M. above, few investors will “feel fine” during periods of market downturn and volatility. It is perfectly fine and normal to feel this way, however, as you can see in the chart above, acting on these feelings has historically been detrimental to your wealth.

I know I have shared messages like this with you in the past. However, consider this your next dose of “financial vitamin C.” The body does not store vitamin C and must be given regular doses to be healthy. I am trying to do the same for your financial well-being. It is an important message that needs to be reiterated occasionally as we all continue “Moving Life Forward.”

Senior Wealth Manager

It's (NOT) the End of the World as We Know It

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