WHY THE STOCK MARKET IS IGNORING THE ECONOMY
You can get mad at me for this.
But I'm a relentless optimist who will always see the glass of water as half full.
It drives me nuts that the media is so obsessed with bad news that they neglect to report good news. Here’s the latest example, from last Friday:
The Dow Jones Industrial Average had its best two-week performance in 80 years.
Unless you read the Wall Street Journal, you probably missed this remarkable news.
Financial experts are baffled because they expected the high number of people out of work to keep the stock market down. That would make sense in normal times, but these times are far from normal.
On 2/21/20, the Dow closed at an all-time high of 29,551. On 3/23/20, it closed at 18,591.
It lost 37% in one month, which means you would have lost everything you have if that rate continued for two more months.
But for some reason, the Dow ended last week at 24,242. This means it was back up by 30% in less than a month. Your retirement account would quadruple if that rate continued for a year.
This is not to imply that we're out of the woods. The Dow is down again this week, and it looks like this wild roller coaster ride is going to last for a while.
But the market being up by 30% in a month when the economy was on hold should have been front page news.
Here are two more reasons to be optimistic about your financial future.
1. The stock market tends to do well after epidemics pass. A year after the 2003 SARS epidemic, the S&P 500 was 21% higher than it was before the epidemic. A year after the 2013 MERS epidemic, it was 18% higher than before. A year after the 2014 Ebola epidemic, it was 10% higher than before.
2. The stock market tends to do well after presidential elections, regardless of which party wins.
I’m not suggesting there isn’t plenty to be scared of right now. But there's a big difference between being AWARE of bad news and being CONSUMED by it.
In a time when most people are more worried about how to pay bills than dying from Coronavirus, people need hope. And there is plenty to be hopeful about.
Yours in Servant Leadership,
Glenn Shepard
A Relentless Optimist
P.S. I'm not kidding about the first sentence of this article. We actually get nastygrams from people who are furious that anyone would be optimistic in such scary times.
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