It seems like on a fairly regular basis, someone is predicting that the next “big stock market crash” is just around the corner which will shortly be followed by the end of the world. The news media certainly fans the flames of these end-time predictions with blaring headlines whenever there’s a swoon in the markets.
For instance, check out this headline from CNNMoney: “After historic 1,000-point plunge, Dow dives 588 points at close”.
Here are a few choice tidbits from the article. (Notice the choice superlatives to amp up the drama.):
- The 588-point decline was the worst for the Dow since August 2011.
- Within minutes after the opening bell, the Dow plummeted 1,089 points. That is the largest point loss ever during a trading day, surpassing the Flash Crash of 2010.
- “We have not seen this level of full-blown panic in markets for quite some time,” said Peter Kenny, chief market strategist at Clear Pool Group, a financial technology firm.
Being election season, of course the presidential candidates felt the urge to jump in the fray on Twitter:
The results are in. Unfettered free trade has been a disaster for working Americans. It is high time we ended our disastrous trade policies. – @SenSanders
Markets are crashing – all caused by poor planning and allowing China and Asia to dictate the agenda. This could get very messy! Vote Trump. – @realDonaldTrump
The stock market is in the toilet! The economy is tanking! The sky is falling! Waah! Waahhh! WAAAHHHH!
Before you start looking for the nearest nuclear fallout bunker to dive into, let me just note that this article was from August 24, 2015. That’s six months ago as of this writing, and to the best of my knowledge, the world has not ended.
Lest you think I am exaggerating people’s response to news like this, there was a small chorus of voices specifically pinpointing a total and final collapse of the US economy in the fall of 2015 leading to the apocalypse. (Just do a Google search on “blood moons 2015” and “shemitah 2015” and see what you come up with.) This sharp and sudden drop in the US stock market played right into their prognostications and provided fuel to whip their adherents into even more of a frenzy. Of course, this is just one case, as folks have been predicting such things since the stock market has been invented.
Since August 24 in the Media
It’s fascinating to note that since August 24, 2015 the Dow Jones Industrial Average moved sharply up by 2046 points or DOUBLE that historic one-day loss by November 3, and then down again to a low of 15,660.18 on February 11, 2016 which happens to be actually 1.3% BELOW the closing level of the Dow on August 24!
In other words, the sensationally worded article that I quoted early in this post was just that—a sensationally worded article. Why didn’t the media make as big of a fuss when markets recovered? Where were the faux-screaming memos that the world was even GREATER peril when the Dow dipped below the level of August 24? The stock markets have marched higher AND lower since that time, meaning that “historic day” in stock market history was of little consequence in the grand scheme of things.
Let me put it this way, the media needs shock factor in headlines in order to bring in readership which in turn helps them sell advertising, and so sudden movements of the stock market get blaring front-page attention, but gradual stock declines over several months get nary a peep. It’s all about what’s most attention grabbing. So please bear in mind that the media’s headlines aren’t always good measures of what’s actually happening in the markets.
Stock Market: Barometer for the Apocalypse?
The closing price of the Dow on August 24, 2015 was 15,871.35. At its lowest point following the greatest financial crisis since the Great Depression, the Dow hit 6629.94 on March 2, 2009. In other words, on the day of the “the largest point loss ever during a trading day” and a day when investors were in “full-blown panic” and during the time which conspiracy theorists predicted was the beginning of the end as we know it, the Dow was still up a whopping 139% from the low in 2009!
Since then, the economic forecast of the world certainly hasn’t been rosy, and I’m not naively suggesting that all is well in the world and that there’s no chance of another crash. What I AM suggesting, however, is that would-be financial prophets have come and gone with their apocalyptic stock market predictions, and 100% of them have been wrong. In fact, even with the oft-publicized gyrations and volatility of the markets, the steady trend of the stock market over the long-term has been inexorably up. So according to history, the prediction with greatest probability of being right is that the stock market over the long-term will continue going up!
I hope you’ve picked up my point in this article by now. If not, let me just be explicit about it here:
The stock market is a terrible predictor of the end of the world.
Strangely, it seems that many people are drawn to the stock market as a barometer of the apocalypse like a moth to the flame. The results of each are also equally as unpleasant. Let me say it again, the stock market is NOT the place to look to predict the end of time.
The Bible and the End of the World
Now before I go any farther, let me say that as a Bible-believing Christian, I do believe that the world will end someday when Christ returns. And I believe that day might be soon. In fact, I don’t even deny that the Bible indicates there WILL be financial turmoil at the end of the time (see James 5 and Revelation 18). I’m just saying that the stock market is not the way to determine when that day will be.
I find far more sensible, reliable, and practical insights on the end-times in the Bible’s prophecies than even the most sophisticated interpretations of the stock-market tealeaves. (The books of Daniel and Revelation along with Matthew 24 being the prime sources.) In other words, I interpret the news by the Bible rather than interpreting the Bible in light of the news.
So let me share three reasons not to use the stock market to predict the end of the world.
1. Forecasting the Movements of the Stock Market is a Fool’s Errand
No matter the flavor of financial doomsayer, the common denominator for all of them is the prediction of a giant, catastrophic, unprecedented, irreversible market crash. So let’s be clear, no matter the religious, philosophical, or psychedelic underpinning, at the core, the prediction of the end of the world using the stock market is in essence forecasting the future movements of the stock market.
Let’s think about this for a moment. The ability to predict the future movements of the stock market (aka “timing the market”) happens to be precisely the entire purpose of just about every investment banker on Wall Street! Let’s be honest, if ANYONE has the ability to figure out where stocks are going before it happens, that person will be the wealthiest, most powerful, and most influential person on earth. The fact that we don’t see such a person around seems to indicate how impossible it is.
The fact that even Warren Buffett, widely credited as one of the greatest investors of all time, repeatedly acknowledges that he has no idea where stocks are headed on the short-term should make clear that it is simply a fool’s errand to try to forecast the next stock market crash.
There are extremely powerful and well-funded players in the world trying to unravel the future of the stock market. Believe me, if it were possible to accurately time the market, there’s no shortage of people ready to exploit it.
2. Forecasting Which Crash Will Be the Last is Doubly Impossible
So suppose that a stock market doomsday prophet somehow crosses that first hurdle of being able to accurately forecast the next financial crash (since after all, even a broken clock is right twice a day), he is faced with a second hurdle to overcome. Now he must be able to definitively know that this will be the LAST crash.
The simple fact is that there have been MANY stock market crashes in history. In this list of stock market crashes and bear markets on Wikipedia, I count 28 since the year 1900. So if crashes are somewhat regular occurrences and even THEN we can’t ever seem to accurately predict the next one, what is the likelihood that we will be able to identify which one will be the FINAL one?
To this day, the Wall Street crash of 1929 is still the largest in history, and it certainly would have been a prime candidate for being the last one—but yet, Wikipedia lists over 20 additional crashes since then! Given that history, no matter the size of the next crash, how is it possible to know beforehand that the economy won’t recover like it has from very seismic crashes in the past?
Speaking of seismology, allow me an analogy to illustrate. Everybody believes that there will be another earthquake in California. Just about no one can guess when the next one will hit, and definitely no one can predict when the LAST, “big one” will hit that craters California into the Pacific Ocean. In the same way, it doesn’t take much wizardry to believe that the market will crash again (pretty much everyone already does), but it will require fortune telling to reliably predict when the next one will hit, and it is downright ludicrous to think that we can identify which one will be the last one.
3. The Bible Tells Us to Stop Trying
As I’ve mentioned before, I take my end-time preparation tips from the Bible. And on this subject, Jesus Himself tells us in Matthew 24:36 that no man knows the day or the hour of His coming and the end of the world—not even the angels in heaven! So trying to predict the end of the world using the stock market goes directly contrary to the words of Christ Himself!
As a Christian, I fear that many of my fellow believers try to substitute the external indicators in politics, the economy, and yes, the stock market for what we can only find in the Bible. Perhaps it’s out of a sense of fear, or maybe a sincere belief, or possibly a misguided appetite for conspiracies, but it’s easy to start worrying about an uncertain future and then to turn to faulty guides and false prophets.
The purpose of this post has not been to give investment advice, nor has it been to say that all is well in the world. But rather to help snap the mental seatbelts on for when we have to deal with such apocalyptic stock market predictions. Let’s use our heads whenever we hear sensational claims and not our emotions.