There may be no underlying financial issue, but percentage wise we're going down much faster. September to Oct 2008 was a 9.5% drop (steepest month drop). Past 30 days was a 20.5% drop. Tracking s&p 500.
In my personal view 'The Market's purely reflect consumer confidence. They appear divorced from actual reality, aside from how that affects the mindset of easily panicked lemmings.
And the stock market varies wildly on a daily and monthly basis without affecting the prices of almost anything.
It seems clear to me that money is not even close to affected by consumer confidence the way the stock market is.
T-shirts, on the other hand, much more slowly change to match confidence, for the same reasons. If you think people collectively over- or undervalue T-shirts, it is rather hard to make money off of that mistake. In part because it implies moving physical stock, but also because they are a relatively refined product. Markets for natural resources see some of the same fluctuations as stock markets, although not to the same degree.
It’s also unclear how long it will take everything to recover, if they do continue to fall.
Oh, BTW, the floor is hard-set at zero, which they'll never get to, since -- given there is no underlying financial issue, and that demand is going to be higher than ever once we're done with this -- all these companies have intrinsic value.
Yes, of course, the market won't go to zero. But some firms will go under, and we don't know how severe the economic impact will be. Just because the crisis began with a natural disaster rather than a financial one doesn't mean there can't be serious financial impact.
But back to pandemics. Pandemics typically result in major booms due to (a) the die off, (b) the pent-up demand, and (c) the fact that everyone still trusts the financial system. The 1918 pandemic certainly caused major GDP losses, and short-term pain, but also caused the 20s
Short of a bailout, that’s not going to be easy to recover from. And even a bailout won’t be enough to bring about a full recovery anytime soon.
- Local and state governments provide bailout funds to suffering local businesses
- Said governments issue new bonds to pay for this relief
- Fed uses the recently-announced QE funds to buy the government bonds
The question then becomes if communities can get organized enough to approve this, and then convince ratings agencies that the new bonds are good.
https://www.economist.com/finance-and-economics/2020/03/12/c...
Everyone else should wait for the upward trend to make sure it's not going to get much worse. You want to "predict the staircase" and not "the floor".
"Don't try to catch a falling knife."
Not a financial advisor, standard disclaimers, etc.