You've heard by now that it's the 25th anniversary of Black Monday, that fateful day Oct. 19, 1987, when the Dow Jones industrial average plummeted 508 points in a single day, suffering a loss of nearly 23 percent. That event shook the investment world. "Yesterday's thunderous collapse smashed whatever life was thought still to be in the bull market of the previous five years," The Wall Street Journal declared in its coverage of the event the following day. John J. Phelan, then chairman of the New York Stock Exchange, was quoted as saying the crash was "the worst market I've ever seen, and as close to financial meltdown as I'd ever want to see."
Fast forward to May 2010, when the Dow fell nearly 1,000 points within 30 minutes. OK, so that loss represented a mere 9 percent loss, but it still rattled investors.
With the benefit of hindsight, we know the bull market that began in 1982 didn't die in 1987. In fact it had a lot more legs, regaining its losses by the following year and going on to reach new highs over many more years.
Despite those two events, and the big bear markets that we endured in the first decade of this century, I can't help but arrive at the inescapable conclusion that the stock market is resilient. Investors who sold out after a drop locked in their losses. But those who hung in there made money.
The historical biggie was the crash that began on "Black Tuesday," Oct. 29, 1929, resulting in an 89 percent decline over the next couple of years. After that crash, many investors renounced the stock market forever -- some still to this day. It took 25 years for the market to get back to pre-Depression-era levels.
But those who gritted their teeth and invested through that time period made out very well.
So what's the retirement planning takeaway? The stock market may unravel. We have so many events coming up that augur chaos -- the elections, the fiscal cliff, the national debt, the European debt crisis, and, of course, the end of the world (in which case, there's no point in investing at all).
But I tend to have an optimistic outlook and believe things will turn out OK, no matter what happens. We may slog through some rough terrain in the near or distant future. But don't let it steer you off course.
Fittingly, a resolution passed by Congress last month marks next week -- Oct. 21 to Oct. 27 -- as National Save for Retirement Week. Take two minutes to read the resolution. It's short and provocative. Among the clauses, it states that "the need to save for retirement is important even during economic downturns or market declines, which make continued contributions all the more important."
Celebrate National Save for Retirement Week by taking advantage of your workplace retirement plan. Increase your contribution to 10 percent or 15 percent of your pay or more if you possibly can. We may go through more turmoil in the future. View it as an opportunity to buy stocks at a bargain. And allocate your investments wisely.
Conquer your fears by using your head instead of your gut when investing. That's how to slay the dragon and come out ahead.
Follow me on Twitter: BWhelehan