Washington Shuts Down. Markets Don’t.

The government is closed. Agencies are shuttered. Headlines scream crisis.

But markets? They’ve seen worse.

I know shutdowns because I worked through them inside government. The panic feels real in the halls of D.C. — but step outside, and the private sector keeps moving. That disconnect matters.

Shutdowns Are Common, Not Catastrophic

Since 1976, the U.S. has seen 21 shutdowns. Each time, the story sounded the same: “This time it’s different. This time the markets break.”

And every time, they didn’t.

• 1996: A 21-day standoff rattled nerves, but the market resumed its climb.
• 2013: A 16-day shutdown left the S&P slightly bruised, only to finish the year +2.4%.
• 2018–19: The longest shutdown in history (35 days) — barely a scar on long-term performance.

Shutdowns are political theater. Markets are economic engines. Don’t confuse the two.

The Lesson Investors Always Forget

I learned this lesson the hard way. During the 1996 shutdown, I sold tech stocks in fear — then watched them rebound, forcing me to buy back higher. Painful, expensive.

By 2008, when the world really looked like it was ending, I remembered. I stayed the course. It saved me.

Shutdown panic is a tax on the undisciplined.

Where Risk Actually Lives

That doesn’t mean every stock skates free. Industries tethered to federal contracts and approvals feel the squeeze:

• Defense contractors waiting on budgets.
• Biotech firms needing FDA decisions.
• Infrastructure projects stalled for permits.

That’s where shutdowns bite. And that’s where sharp investors can find either discounts or danger, depending on how disciplined they are.

The Real Mistake? Panic.

Investors don’t lose because Washington closes. They lose because they flinch. They liquidate quality holdings, chasing safety, only to miss the rebound that history shows again and again.

Markets aren’t delicate flowers. They’ve weathered oil shocks, inflation waves, dot-com collapse, housing crashes, pandemics. A shutdown is noise, not signal.

Bottom Line

Shutdowns end. Markets adapt. The question is whether investors do.

I’ve lived through shutdowns from the inside. I’ve invested through them from the outside. The conclusion never changes:
Resilience is the market’s default setting. The only variable is you.

So grab your coffee. Tune out the panic. And remember — history doesn’t reward the most anxious investors. It rewards the most disciplined.