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What We’ve Learned

| September 23, 2020

What We’ve Learned

The Good, The Bad, and The Ugly of 2020

What It Was Like

Let’s go back to February 19, 2020. Life was pretty good, wasn’t it? We were still in a solid yet slowing bull market. Sure, we were hearing the pundits grumble about the slowing of the global economy and the bull market ending sometime in 2021. Yet, despite those murmurings, the S&P 500 hit a new all-time closing high on February 19th at 3,386.15. Just one day shy of six months later the S&P 500 hit its next new record at 3,389.78. Wouldn’t it be nice if that’s all there was to the story? Sadly, the roughly six months in between those two records were also a record. The most dramatic market crash we have ever seen in our lifetimes.

What Happened

Not that anyone has forgotten what happened, but let’s recap what took place in the six months between those market highs. Shortly after the February 19th record, the coronavirus reared its ugly head and the U.S. and many other countries locked down causing the economy to crumble and the GDP to fall in an epic decline. As a result, we saw a catastrophic rise in unemployment and a massive crash in the equity markets  causing them to fall farther and faster than they’d done since the Great Depression.

This year, 2020, has been one of records, good and bad. The fiscal and monetary response from the Fed set a record as well. On March 23rd, the Fed announced they would go to any lengths to use their lending power to support the economy. With that announcement stocks immediately reversed course and went on a breakneck run logging its 50-best straight days of all time. In fact, markets had their best 100 days since 1933 setting a new all-time-high-record during this time as well.

Fed measures resulted in the rapid healing of many of the leading economic indicators used to measure the overall health of the economy. We were booming again to an extent despite the pandemic. The economy got healthy enough that even though the Fed has not settled on instituting additional stimulus programs, we continue to see upward movement. While the equity market recovered before the economy that is not a negative sign. Markets are also a leading economic indicator and they often operate independently of the economy.

On the public health front, the search for a COVID-19 vaccine has become our generation’s Manhattan Project but on a global scale. Research, efficiencies, and treatment protocols are advancing at a rapid pace and will be of utmost impact on our future.

What Happens Now?

All that being said, where are we now? What is our “new normal” and where do we go from here?

Well, we’ve just experienced what I like to call “the mother of all lessons in investing”. What we have been clearly reminded of in this tragic global crisis, is that investor decision-making is an emotional process, facts don’t often enter the picture. So, we need to make sure that we stick to the facts, lean on our team of advisors and financial professionals, and try our best to practice patience. We often make better decisions and may even avoid losing as much when we follow a rational team approach during crises, or really any type of market and economic environment for that matter.

Here are the lessons we’ve learned so far from this “black swan” or unpredictable event.

No one can forecast a black swan event like this, even if it’s a good thing.

  1. When a crisis hits the so-called “experts” don’t know any more than us “regular Joe’s”.
  2. The media can always be trusted to take anything and turn it into the end of life as we know it!
  3. Believe it or not, drops of an average of one third in the equity market are a common thing, in fact we’ve had one just about every five years since the end of the second World War.
  4. The Fed is the “lender of last resort”, we’d be foolish to ever think that they’d be out of tools or resources to step in and help.
  5. Both bull and bear markets end.
  6. No one could have predicted the decline, or recovery for that matter.

I guess at the end of the day, the moral of the story is that slow and steady wins the race. This means that it is always best to be a patient observer rather than an anxious trigger-puller. Trust that the markets, the economy, and the Fed are doing exactly what they are supposed to do,  that nothing lasts forever, and make sure you have a solid team managing your financial future. That recipe can bring a lot of sanity to just about any situation.


Source: Murray N. (2020, September). Six Months Less One Day The Tragedy is Complete. NMI Nick Murray Interactive. Retrieved from URL


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.