Of that day twenty-five years ago, the markets are the least important thing. 2,977 people never made it home, and no consideration of stock indices italicet similiaitalic deserves to stand anywhere near that fact. Countless inconclusive analyses, countless conspiracy theories, and countless falsehoods followed September 11, 2001 — among them a belief that still shapes plenty of investment decisions today.
The belief runs roughly like this: geopolitical shocks crash the markets, but the crash doesn’t last — stocks bounce back quickly, and whoever bought into the panic came out ahead. It’s the same reasoning I’ve been reading for months now, as the conflict in the Middle East and the closure of the Strait of Hormuz push crude oil prices toward $92 a barrel, prompting some to wonder whether this isn’t the moment to buy. September 11 gets cited as the precedent that proves it. It doesn’t prove anything of the kind. It’s worth looking at what actually happened, because the facts differ from the common memory.
After the attacks, US stock markets stayed closed for four consecutive sessions — the longest suspension since 1933. When trading reopened on Monday, September 17, the Dow Jones fell 7.13%. In points, that was 684 — the heaviest single-day point drop in its history up to that time. In percentage terms it was “only” the fourteenth worst, a detail that got lost in the headlines. Over the course of a week the Dow shed about 14% and the S&P 500 lost 11.6%, wiping out roughly $1.4 trillion in market capitalization.
Then came the recovery — the part everyone remembers. Within a month the S&P 500 had recouped its losses, climbing back above its September 10 level. By December 11 it was even up 3.8% compared to the eve of the attacks.
But thirteen months after the attacks, on October 9, 2002, the S&P 500 closed at 776 points — about 29% below its September 10, 2001 level. The blame didn’t lie with September 11, but with the deflating of the tech bubble that had begun in March 2000, a US recession already six months underway, and the wave of accounting scandals that engulfed giants like Enron and WorldCom.
It makes no sense to credit — or blame — September 11 for either the October rally or the following year’s collapse. That day, the panic hit a market that had already been sliding for a year and a half, and an economy already in contraction. Anyone who cites September 11 to argue that geopolitical shocks resolve themselves on their own is cherry-picking a thirty-day window inside a bear cycle that lasted thirty months and passing it off as a general rule.
The S&P 500 retraced its steps within a month, but that wasn’t true across every sector. Airlines took years to recover, insurers absorbed brutal losses — consider that Warren Buffett’s Berkshire Hathaway closed 2001 with a $3.77 billion loss, almost all of it tied to policies hit by the disaster. Meanwhile the defense sector climbed, and industries — security, surveillance, biometrics — that had been niche just a year earlier began to grow.
Saying “the market recovered” describes an index, true, but not the reality of individual portfolios. Anyone exposed to the wrong sectors didn’t recover in a few weeks — in some cases, they never did. After a shock, diversification across sectors matters far more than the average direction of the index. That was true then, and it’s true now, with the added twist that today’s heavy concentration of major indices in a handful of tech giants makes the phenomenon even more treacherous.
But the main reason the comparison to today falters is the very nature of the crisis. September 11 was, economically, a confidence shock — it paralyzed the appetite to travel, spend, and invest. It was a violent, immediate blow that the Federal Reserve could manage with the classic emergency toolkit — rate cuts and fresh liquidity — a recipe that worked.
Today’s situation is quite different. Tensions around the Strait of Hormuz and the Middle East crisis are generating a supply shock, driving up the cost of a basic resource that feeds into every production chain. And facing a supply shock, central banks have their hands tied: cut rates, and they risk fueling inflation; raise them, and they worsen the very slowdown the shock is already causing.
That’s why the International Monetary Fund (IMF), back in July, revised its global inflation estimates upward while cutting its growth forecasts. Seeking comfort in 2001 may feel reassuring to some, but it risks leading them astray. Back then the central bank could act as a firefighter; faced with an energy shock, the fire extinguisher risks fueling the flames.
Far be it from me to counsel pessimism. Swinging to the opposite extreme and selling everything the moment a crisis hits is a choice that has historically destroyed far more capital. The real lesson of these 25 years is that what matters isn’t so much the nature of the shock as the state of the economy’s health when the shock lands. In 2001 the market was already exhausted and in recession, which is why October’s rally was just a pause inside a longer downward channel. In 2020 the pandemic found central banks ready for anything, and the restart was immediate. Today’s energy tensions are landing on an economy with public debt at record highs, high inflation, and shrinking room for monetary policy maneuver.
If one really wants a historical precedent to look to, the better reference isn’t 2001 — it’s 1973, the year of the first oil shock. And if there’s one lesson that September 11, twenty-five years ago, should have left us with, it isn’t about the timing of buying stocks after a tragedy — it’s how fallacious the memory we construct of crises can be, and how dangerous it can become to use that memory as a guide to the future.
Editor’s note
This article was originally published in Italian on money.it by Flavia Provenzani on September 11, 2026 as «25 anni dopo. Cosa insegna l’11 settembre a chi investe oggi». It has been translated and adapted for an international audience by the Money.it International desk.
