- In 1994, Mexico devalued the peso and much of Latin America suffered slow growth and inflation. Brazilian bonds traded at 40% of face value until 2002.
- In 1997, Thailand’s currency crashed. The fallout spread to Malaysia, Indonesia and South Korea. Many investors feared it was the end for "Asian Tigers." It ended the 33-year rule of Indonesian president Suharto.
- In 1998, when Russia devalued its currency and defaulted on its debt, it caused one of the biggest failures of the modern era – the collapse of Long-Term Capital Management hedge fund. U.S. stocks plunged, and the New York Times wondered if Russia could survive.
- In 2001, rioters took to the streets in Argentina after the country suspended debt payments and closed banks to avoid a currency run. Unemployment hit 20%, and as much as half the population of a once prosperous nation fell below the poverty line.
Each of these events sparked big sell-offs in the U.S. stock market. And each time, stocks bounced back for an average of 17% in a year.
The moral here would seem to be apparent: buy stocks when financial crises make it seem like the world is about to end. Because chances are, the world isn’t really about to end.
During the financial crisis of 2008, some predicted the demise of capitalism and the end of the American banking sector. We may not have emerged completely yet, but stocks are well above their mid-crisis lows, even after the latest crisis, courtesy of debt problems in Greece.
No one can guarantee that stock prices will be higher a year from now. But if history is any judge, investors should be buying top-quality stocks while there is fear in the air.
Investment strategist Ian Wyatt is holding a special video investment conference to discuss current investment opportunities. It’s called Profiting from Crisis in Europe. This critical investment event airs this Friday, June 4 at 6:00 pm. It’s free to attend and you can register right now.
Event attendees will receive a complimentary copy of Wyatt’s latest Special Report called Profits from the 5 Winning Mutual Funds Your Financial Advisor Doesn’t Know About. Don’t miss this chance to find out what stocks to buy for the stock market recovery.