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Written by: John Drachman
“Where were you during the Great Coronavirus Outbreak of 2020?”
For most, the answer will be some variation of “I stayed at home.” Once the 30-day food supply is secured, many will have also found the leisure time to get creative, develop a fitness routine, or simply contemplate the post-Covid-19 shape of the economic recovery heading our way.
The good news is one doesn’t have to be an optimist or delusional to see a future for investors on the other side of the current situation. Every pandemic ends. Even in the worst case scenario – a vaccine is never found – Covid-19 will likely be sidelined except for seasonal eruptions met by hopefully better preparations and localized lockdowns.
One doesn’t even have to be overly impressed by the S&P 500’s biggest daily gain yesterday since 2008. One just needs to consider three facts and some recent history to see a future on the other side of today’s pandemic.
History Lesson
The S&P 500 was in a harrowing place almost 11 years ago to the day when it closed 2,047 points lower than yesterday’s record surge. March 9, 2008 was the bottom of the Great Recession. The S&P 500 had sunk to 700 – its lowest point since 1995. Guidance from Goldman Sachs warned the S&P could fall to 400. Then, like now, conspiracy theories were rampant. One hedge fund manager publicly warned clients to buy shotguns in case of social unrest. Against that gloomy period, three facts are worth considering that relate to the current situation.
- - The lowest point of the Great Recession proved to be the springboard for the greatest bull market in history. We now know of course that investors who had the fortitude to buy stocks on March 9, 2009 would have made a fortune despite the current Covid-19 volatility.
- - Liquidity likely will save the day, again. Then like now, governments worldwide are underwriting their economies by injecting more liquidity into the global financial system providing companies and workers with the cash needed to find their footing when business resumes.
- - “Flattening the curve” is certain to accelerate economic growth. In a departure from the Great Recession’s uncertainties, we actually have a unified healthcare consensus on what the shape of tomorrow’s recovery could look like. A chart called “Flattening the Coronavirus Curve” shows us when life will start to return to normal. When caseloads drop to a point that’s less of a strain on a region’s healthcare system, people go back to work and business picks up.
Some sections of China are already starting to return to daily life. Despite the prospect of intermittent lockdowns, the opportunity for people and markets to prosper again becomes less remote. For the short-term, of course, investors will have to withstand more uncertainty. “The phones are off the hook these days,” says Winnie Sun of Sun Group Wealth Partners. “Our clients fall into two categories. The first are a little bit older and closer to retirement. Our younger clients have time on their hands and are considering investing more.” Regardless of age though, the most successful investors often turn to such financial professionals to help them through a major crisis like the Great Coronavirus Outbreak of 2020.
John Drachman is a contributing writer to MyPerfectFinancialAdvisor the premier matchmaker between investors and advisors .John is an IABC award-winning writer, who applies his 30 years of financial marketing experience toward advancing the dialog between investors and investment professionals.