The Margin

Artesys News & Insights

Market Update: Going From a Steep Drop to a Speedy Recovery

They say hindsight is always 2020, but this year has been anything but clear.

2020 started off with all-time market highs, but in February stores closed their doors for the long quarantine. From mom-and-pop shops, hair salons, and restaurants to massive corporations, airliners, manufacturing plants, and retail stores. Few companies felt immune from the circumstances Covid-19 had given us.

While many struggled, some thrived.

Dominos (+28.24% YTD), Peloton (+57.68% YTD), Zoom (+204.90% YTD), and Lowes (+10.38% YTD) are just a few companies that have weathered the storm very well.

Here we are today.

It is June 9th, 2020, just a mere 76 days after the S&P 500 dropped a massive 33.79%.

The only thing more impressive than this steep drop in the market, is the shere speed of it’s recovery.

(Remember a % loss is not made up by the same percentage gain. The S&P 500 would need to increase 51.03% to make up the 33.79% loss.)

What happened?

The economy has been opening up and states are easing their restrictions for people and businesses. Recent jobs reports have been much better than anticipated, a massive stimulus package given to businesses and directly to people, and of course the FED has been taking action.

During this crisis, the S&P 500 experienced 2 of its worst weeks in 20 years

  • -11.44% (#4 worst – week ending 2/29/2020)
  • -14.95% (#2 worst – week ending 3/21/2020)

The #1 worst week over the last 20 years was October of 2008, with a staggering drop of -18.14% (#1 worst – week ending 10/11/2008).

With the bad comes the good. We have also witnessed 2 of the BEST weeks in 20 years for the S&P 500

  • 12.15% (#1 best – week ending  4/11/2020)
  • 10.28% (#5 best – week ending  3/28/2020)

The other top 5 best weeks for the last 20 years occurred during the major market crash of 2008.

So what have we learned? A couple of things.

The market can be very, very unpredictable.

Panicking can cost an investor a lot in a very short amount of time.

Sticking to a prudent investment plan and taking the appropriate amount of risk near retirement can be paramount to success.