The 2020 crash Coronavirus
As this pandemic started in March, the panic caused by the economic implications and confusion culminated in a stock market collapse that included three of the world’s worst downturns in the history of America.
As the US has been locked, over 20 million jobs have been destroyed, companies have shut down and the virus is still spreading. Investors saw their retirement assets lost 30% in two weeks and there were even more concerns among investors about how bad it might be.
The world saw the coronavirus wreak havoc and expected more bad news in April. The market started to recover. This appeared unlikely, confounding many because the economy and the market were so fragmented. Every week, the statistics for unemployment worsened, the economy shut down essentially and no vaccine at the time. And how did it occur?
It wasn’t fate, nor random. Behind the scenes, many work to make sure that our processes and infrastructure don’t collapse. Congress and the Fed have joined the EU and have lowered the interest rate to almost zero. They have introduced a $2.3 billion Fiscal Rescue Program to help economies, corporations, households and local governments.
Cautiously optimistic, investors started to revert to the market and swim faster. The S&P 500 was up 27% by 17 August and set new highs again. With Dow, which reached 30 000 for the first time in history on Nov. 24, the U.S. markets eventually returned to January 2020.
At the end of the year, the stock market was already rising with all that happened in 2020. The Dow Jones got 6.6%, the S&P 500 got 15.6%, and the Dow Jones got a shocking 43.7%.
The most important investment lesson
Although a global economic, financial and health crisis has occurred (and is still occurring), market fluctuations are not exclusively dependent upon economic factors. The economy plays a key role in stock market uncertainty, but panic plays an equal role. Panic was a product of coronavirus and economy instability in 2020. Then at the end of the year, a contested presidential election fueled even more unsafe and fear.
While not prior to 2020, stock market crashes occur very often. Fortunately, significant recoveries are taking place on the market. In the Great Depression, the Dow Jones fell 24.8% (1929). In the Black Monday crash of October 1987, the market lost 22.6 percent of its value. Most recently, Dow Jones lost 50 percent of its value during the Great 2008 Recession. But the market is recovering with every crash and produces an average annual growth rate of approximately 10% over time.
Craig Birk, Capital”s Chief Investment Officer, says we have learned why long-term plans are so important and why we must hold our courses when we experience something from 2020.Comprehension of the priorities, long term strategy and neglect distractions.