Navigating a Turbulent Stock Market: A Look at 2009-2019 versus Today

9/14/2023 - By Chris Stennett, CFP, and Mark Hemby, CFA

Investing offers individuals the opportunity to achieve their goals, whether they seek short-term gains or long-term wealth accumulation. Over the past decade, the landscape of investing has witnessed significant shifts, presenting unique challenges to investors. Comparing the challenges faced by investors today to those of the period between 2009 and 2019 reveals a dynamic and evolving environment.

Market Uncertainty and Global Events

The nation entered 2009 on the heels of the Great Financial Crisis. Though Investors felt ripples from the crisis well into the 2010s, the last decade has been characterized by its exceptional stock market returns (577.95%, or 14.11% per year). The returns for the last 3.5 years look like this: 18.4%, 28.7%, -18.2% and 2023 is up 15.95% YTD as of the date of this writing). Both periods have witnessed their fair share of economic and geopolitical uncertainties. However, recent global events like the COVID-19 pandemic have demonstrated how quickly markets can react to unexpected shocks. The interconnectedness of economies in today’s globalized world means that events in one region can have cascading effects, making it difficult for investors to predict market movements.

Information Overload

The era from 2009 to 2019 was marked by an explosion of online financial information sources. However, the present day takes information overload to a new level. Social media platforms and online sources disseminate news, opinions, and rumors at an unprecedented speed. This constant stream of information can lead to knee-jerk reactions. It can be a challenge to separate valuable insights from noise. Added to that, many professional investment managers use AI-driven algorithms to scour social platforms and news outlets, analyzing sentiments to predict market movements. This flood of data can lead to market turbulence, as swift AI-driven decisions amplify market volatility.

Interest Rate Swings

The period from 2009 to 2019 was also characterized by historically low interest rates, prompting investors to seek higher returns in the stock market. Bond investors have not benefited from holding low-interest-paying investments. However, in 2022, interest rates shot up. Traditional fixed-income investments have a lot of catching up to do to recover from the 2022 downturn and the previous decade of low yields. Going forward, investors might see more interest income from their portfolio but also see higher interest rates on all new financing purchases.

Technological Advancements

In the past decade, technological advancements have transformed the way investors access and interact with the stock market. The rise of mobile trading apps, algorithmic trading, and high-frequency trading has democratized investing but also introduced complexities. The incorporation of Artificial Intelligence and machine learning into stock trading has reshaped the investment landscape. Today's investors grapple with AI-powered trading algorithms that execute trades within microseconds. This phenomenon has introduced a layer of complexity, as traditional investors navigate the fine balance between human intuition and machine-driven decisions. Investors now contend with increased market volatility due to algorithmic trading's lightning-fast actions, requiring them to adapt to rapidly changing conditions.

The investing landscape has evolved considerably in just the past 15 years. Technological advancements, information overload, market uncertainty, low interest rates, and changing investor priorities have combined to create a dynamic and multifaceted investment environment. To succeed in today's market, investors must adapt, stay informed, and develop strategies that encompass these contemporary challenges. For individuals who prefer to handle their own investment management and financial planning, it starts with education. For individuals who prefer to let a professional handle the planning, we recommend meeting with a Financial Advisor.

About the Authors | Chris Stennett, CFP & Mark Hemby, CFA

Chris is a senior financial advisor and Certified Financial Planner® practitioner for Saltmarsh Financial Advisors, LLC, an affiliate of Saltmarsh, Cleaveland & Gund. He serves individuals and organizations as a comprehensive financial planner and coordinator of investment activities. His areas of expertise include investment management, income planning, tax and estate planning and risk management. Chris has over a decade of experience as a wealth manager working with teachers, federal and state employees, retired Armed Forces and private-sector employees. Learn more about Chris

Mark is a senior financial advisor for Saltmarsh Financial Advisors, LLC, an affiliate of Saltmarsh, Cleaveland & Gund. He holds a Chartered Financial Analyst (CFA®) designation and as part of our investment advisory group, he works with clients to develop and implement investment strategies to achieve financial freedom while also ensuring their goals and objectives are aligned. Mark has over 15 years of experience in investment banking working with individuals and organizations to manage their portfolios and coordinate investment activities. In addition to his experience with fixed income trading and sales, Mark owned and operated his own business in Alabama. Learn more about Mark