One Year Later: Have We Learned Anything?

One year ago today, March 9, 2009, marked the end of a harrowing stock market crash that left the S&P 500 darn near 60% off its October 2007 highs.

Of course, March 9, 2009, also marked the beginning of a stock market recovery that has brought the S&P back up 68% in just one year. For individual stocks that were beaten up worse than the rest of the market, the past 12 months have delivered even more incredible gains.

Source: Capital IQ, a Standard & Poor's company.

Though the advantage of hindsight reveals March 9, 2009, as one of the best single days to invest in most of our lifetimes, the situation wasn't nearly as clear back then.

The sky is falling!
To be sure, not everyone was doing the Chicken Little dance, but being a stock market bull in the weeks surrounding the March 9 bottom meant that you were very comfortable with people snickering behind your back.

So what exactly were the experts saying right around the bottom? Let's take a look:

• On March 9, New York University professor Nouriel "Dr. Doom" Roubini said in an interview that the S&P 500 would likely go to 600 or lower and that the recession would last at least into the beginning of 2010.
• Berkshire Hathaway (NYSE: BRK-B) Chairman Warren Buffett managed to find his way to CNBC that fateful day and had some particularly dour comments about the economy. It is, of course, important to note that he didn't express the same negative outlook for stocks. In fact, he even had some positive words for banks like Wells Fargo (NYSE: WFC). And lest we forget, he had made a bold "buy" call in the fall of 2008.
• A few days later, the always-frenetic Jim Cramer wasn't saying much at all after he got dressed down on The Daily Show by Jon Stewart.
• Almost a week later, The Washington Post caught up with market gurus Bill Gross, Peter Lynch, and Burton Malkiel. The three gave an interesting range of answers, from Gross saying that he had sold all of the stocks in his retirement portfolio starting a year earlier, to Lynch quipping that the bargains were so great that he felt "like a mosquito in a nudist colony," to Malkiel simply saying that -- as always -- it was a good time to be an index investor.

As I dug back through the news archives, though, my favorite view from the time came from writer Joe Queenan, who, by March 6, had gotten fed up with the idea that individual investors shouldn't panic and sell their stocks and penned this:

A few weeks ago, I panicked again and moved another hefty chunk out of the market. The Dow was then trading at 7,500; now it is approaching 6,500. I fully expect to panic again at 6,000, probably at 5,000, and might even get in a bit of late-in-the-day panicking at 4,000. Tentatively, I am drawing a line in the sand at the crucial watershed of Dow 3,000, because any hysterical selling beyond that point would be anti-American and counterproductive. ... There is a time for hysteria, and a time when cooler heads should prevail. This is the time for hysteria.

Now I'm not hanging Joe out to dry just for the fun of it. His article is great because it perfectly captured the exasperation and exhaustion that so many individual investors felt as the market ground down to its eventual bottom.

March 9, 2010
Just one year later, and boy, what a difference. Not only has the market recovered significantly, but there are calls out there now that we've entered a "cyclical bull market" that will continue to push stocks onward and upward. Though the gains we've seen over the past year have made some folks cautious, to say that overall market sentiment is like night and day is a severe understatement.

But I want to know what you think. When we celebrate this March 9 anniversary next year, what will we be looking back at?