Let’s be real. The COVID collapse is probably the last thing on everyone’s “to-talk-about” list. We’ve heard enough; we’ve seen enough. We’ve screamed enough. I don’t blame you. This time in history has not been the happiest, but guess what? Times change.
That’s the beauty of life on Earth - it just keeps spinning. And with each turn comes a new table for us to sit at. Rather than see this as an opportunity for progress, we often choose to stay seated at the pity party.
Consider this your personal invitation to something more positive: the belief that happiness happens naturally. It is just as common as every catastrophe you give your attention to. In this month’s blog series, we’re going to pay attention to the positives instead and see how they pay off.
We’ll start with the COVID Crisis. I know, I know - you already want me to stop. But that’s the point. Facing fears is not easy to do, and the overall impact of COVID on the economy is something we are all been afraid of. I’m here to teach you how to meet your monsters, shake their hands, and realize that they have redeeming qualities. We do this when we pay taxes - it’s nothing new.
In March of 2020, the S&P 500 hit what some called its “COVID trough” of 2237.40. Ouch, I know. The dip was definitely daunting and had a lot of us running for the hills. Little did we know that by the time we climbed to the top of those hills, the S&P 500 would have risen, too.
That’s right, in 354 trading days, the S&P 500 had doubled to 4,479.71, rallying 100% and becoming the fastest bull market doubling off a bottom since World War II. A process like this would typically take years, but our market managed to do it in almost one. That’s something to be proud of, to be positive about - we just refuse to.
You think this is too good to be true. And whenever things are too good to be true, there are bad things ready to prove them wrong. But before you click off of this page and into some panic-laden Facebook post, let me give you a few reasons why this progress is possible.
Yes, a bounce-back like this one is something that typically takes years. But this last year has been far from typical. COVID was an unprecedented occurrence, and it’s safe to say no one expected it to happen when it did, how it did, and why it did.
Since the cause of the crisis was so unexpected, the reason behind its rise and resolution is something we also tend to overlook. When the pandemic began, corporations were shut down suddenly. This, amongst other things, led to the abrupt economic downturn. Now that the pandemic is slowing down, corporations are speeding back up and seeing what’s known as a “massive earnings comeback.”
As businesses reopen, corporate profits have jumped off from the bottom they fell to last March. In fact, the S&P 500 is now reporting year-over-year earnings of 53% for the first quarter and a potential 93.8% for the second. As we all well know, the market is made up of cycles, but even its most cyclical areas such as materials, energy, and industrials have doubled since their dark times last year.
Why?
Because people stayed positive.
The thought of a potential reopening sent a surge of optimism through the population, and corporations used that as fuel. Firms found the confidence to make big moves, and just as certainly as the market fell, it’s starting to stand again. As convinced as we all were that the end was close, it turns out that a come-back was closer - which is usually the case. So, before you believe in the bad, remember that the good is just as real and just as ready to pop up unexpectedly.
Stay tuned for next week's blog, until then…