Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
Imagine visiting your bank on a weekday morning to make a withdrawal only to be told you could not access your money until further notice. That would cause you some anxiety, wouldn’t it? That’s exactly what happened to investors this past week.
In a rare occurrence, the New York Stock Exchange and other major stock exchanges were closed on Monday and Tuesday thanks to Hurricane Sandy. Flooding, power outages and subway closures made it impossible for Wall Streeters to get to work.
While the vast majority of stock trading is now done electronically, human beings are still critical to that process — no people, no trading. And no trading means no access to your money. Once a skeleton crew was able to reach the Exchange, trading was back up and running on Wednesday.
Such market shutdowns act as a circuit breaker, a protection mechanism to prevent the markets from spinning out of control in times of chaos. Here are a few other events that forced an unexpected market closure:
Aug. 8, 1885 - Funeral of Ulysses S. Grant
Mar. 12-13, 1888 - Blizzard of 1888
Jul. 31-Nov. 27, 1914 - Outbreak of World War I
Jun. 13, 1927 – Celebration parade for Charles Lindbergh
Aug. 15-16, 1945 – V-J Day marking the end of World War II
May 25, 1946 – Great railroad strike
Nov. 25, 1963 – Funeral of President John F. Kennedy, Jr.
Jul. 14, 1977 – Blackout in New York City
Sept. 27, 1985 – Hurricane Gloria
Sept. 11-14, 2001 – Terrorist attacks on the World Trade Center
Counting Sandy, that’s 11 emergency closures in 127 years — not even one per decade.
The market is able to survive even the worst situations, overcome lost trading days and find its way back to normalcy. If the market can trend up over a century of natural and man-made disasters, it surely can survive a few bad earnings reports.
– Wes Moss, for AJC Atlanta Bargain Hunter blog