When 2020 began, we all had our travel plans laid out for the year and the biggest news was the bushfires burning across Australia. My son, Karston, even ran a personal fundraiser to support the relief effort. Who would’ve thought that, just weeks later, we’d come face-to-face with the worst pandemic of our lifetime?
As it pertains to the stock market, we also observed the fastest market crash on record…by a long shot. Below, you can see the timeframe over which the market dropped more than -34%, and it did so in a mere 22 days.
To put that kind of speed into proper perspective, I took the exact same timeframe and put it on top of the initial market decline in the 4th quarter of 2018. The box below is the same 22 days, but the market barely budged. In fact, it took almost 60 trading days before bottoming on Christmas Eve that year, down almost -20% (and we thought that was fast at the time!).
Still more perspective below… you can’t stop with the 2018 market drop because again, it was a relatively fast drop as well (at least, a faster drop of that magnitude than we’d seen in quite a long while).
Below is the exact same 22 days again, but this time I’ve overlaid it on top of the 2007-09 mortgage crisis, which is what we’d call a “normal” run-of-the-mill market crash. Over the course of that 18-month period, more than ½ of the S&P500’s market cap was wiped out, as it fell almost -58%. But here’s the thing: Look at how small the box is below. This year, the market fell more than -34%, all within the tiny span of that little space in time. Insane…
“But wait, there’s more!” Here’s the 2000-02 dot-com bubble, a long, wretched, two-year market crash that dropped -47% by the time it was all said and done. Again, look at how tiny the “2020 box” is when overlaid on top of that crash.
The point of sharing all this is to show how much faster the market has been moving this last few years and it only seems to be accelerating (not the other way around).
Below is an interesting chart shared by Callie Cox on Twitter. In the ten years between 2010 and 2019, there were 58 times that the stock market moved up or down by 3% or more. This year, in 2020, it happened 45 times… in one year!
So, what we’ve faced this year is a combination of high market volatility, the fastest bear market in U.S. history (faster than the Black Monday bear market from top-to-bottom, and even faster than The Great Depression… again, by a long shot), high unemployment, rising bankruptcies, and the most divisive Presidential election in history.
Some of us have lost loved ones to this virus – many of whom were too young to die. I’ve personally lost one family member with another currently in critical condition, as COVID tore through roughly half of the Koós fam in November.
With only 15 days left in the year, I don’t know that there are too many people who aren’t in a hurry to see 2020 come to an end. I know that I’m looking forward to a fresh, new year of health, prosperity, and hopefully positive stock and bond markets.
While we’ll have one more podcast coming up on Friday, this will be my last article of the year as I do my best to spend some much-needed, intentional time with Donna and the boys.
I hope you all have a wonderful, long, relaxing holiday and join me in enthusiastically kicking 2020 to the curb.
Till next year…
Categories: Adam Koos, CFP®, CMT®, CEPA, Market Commentary