A year ago this week, the stock market formed a significant bottom. Stock prices dropped nearly 35% in less than five weeks due to the economic impact and fears of the coronavirus. We would consider it a crash. Crashes often occur from an unpredictable, exogenous event, that is fueled by extreme economic uncertainty, and culminates in sheer panic. Some statistics to reflect upon 12 months removed from that anxious period:
- Almost 7 million people filed for unemployment insurance that same week.
- On April 20th, the unemployment rate peaked at approximately 15%.
- Many states had “shelter in place” mandates, mask orders, with most retail businesses and schools shut down.
- Despite those unprecedented events, investors started to buy again, and the stock market (S&P 500) would return almost 80% in the coming year.
- Here is an illustration of some of the companies hardest hit by the pandemic and how their stocks have done in the past year:
- American Airlines +50%
- Hilton Hotels +68%
- Carnival Cruise Lines +67%
- Darden Restaurants (Olive Garden) +155%
Markets go from fear to greed and back again. This emotional aspect of investing should never be overlooked. Time and again we learn it is always best to stay the course. Panic creates opportunity.
PROMISING VACCINE PROGRESS
The speed at which vaccines have come to market is nothing short of extraordinary. According to the New York Times:
- At the current pace 70% of the population should be vaccinated by mid-June.
- The New England states are some of the best at delivering vaccinations, with at least 30% of the population already receiving one shot.
- Connecticut leads the Northeast at 32% receiving at least one shot; only New Mexico and Alaska have performed better with 34% of their population receiving at least one shot.
The Ever Given, a 1,315-foot tanker that can carry up to 20,000 metal shipping containers, is currently stuck in the Suez Canal, causing a major traffic jam in the Asia/Europe shipping lanes. As a result, more than 100 vessels are stranded and waiting to pass on either side of the canal. Analysts predict this situation thwarts almost $10 billion a day in goods that are unable to get to their ultimate destination.