Author Topic: Covid and stock market  (Read 970 times)

joenorm

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Covid and stock market
« on: July 19, 2020, 09:50:50 AM »
Has the stock market even begun to see the effects of Covid yet?

I understand nobody has a crystal ball and cannot guess where the market will go.

But looking at unemployment and other economic numbers are you all expecting a bigger downturn to the market soon?

I do not have a good enough understanding or interest in the stock market to be able to have an opinion on this, but I am curious what people think who are much more tuned in(and smarter) than I.

thanks 

Psychstache

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Re: Covid and stock market
« Reply #1 on: July 19, 2020, 09:54:42 AM »
Has the stock market even begun to see the effects of Covid yet?

I understand nobody has a crystal ball and cannot guess where the market will go.

But looking at unemployment and other economic numbers are you all expecting a bigger downturn to the market soon?

I do not have a good enough understanding or interest in the stock market to be able to have an opinion on this, but I am curious what people think who are much more tuned in(and smarter) than I.

thanks

I am neither smarter nor more tuned in, but my general working assumptions at this point are:

1. The stock market and the economy are fairly divorced from each other in how they behave, given:
2. The Fed Reserve and the Rich and Powerful Elite would be greatly hurt by having the stock market collapse or fall to pieces, so they will engage in whatever shenanigans they need to in order to maintain it's relative stability
3. If their efforts fail, we will fall into a kind of crisis that requires me to care about other issues beyond my investment portfolio.

Not exactly the rosiest of dispositions, but it has held up pretty well thus far.

MustacheAndaHalf

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Re: Covid and stock market
« Reply #2 on: July 19, 2020, 10:25:00 PM »
In March the U.S. stock market had significant losses, so yes Covid has impacted the stock market.

I think it's more useful to ask how has Covid impacted tech stocks versus the rest of the market.  The top 5 largest companies are all tech stocks, and are about 20% of the S&P 500.  When large areas of the U.S. locked down, Amazon did well when they lacked competition from retail stores (which were closed).  Cloud services had more usage, where Microsft / Amazon / Google are big players.  And so on - tech is doing fine, because everyone can still be a customer from home.

The rest of the market hasn't done as well... and some stocks are particularly hard hit.  If you look at restaurant and retail stocks, they are down heavily for the year.  But if you look at the overall stock market, it's about break even.  And if you look at those big 5 tech stocks, they have incredible gains that are lifting up the overall stock market.  So if you break the stock market into smaller parts, you see a different picture than if you look at the whole market.

Buffaloski Boris

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Re: Covid and stock market
« Reply #3 on: July 20, 2020, 07:11:10 AM »
There are a lot of markets and segments of stock markets. When people talk about ďthe stock marketĒ they usually are talking about the US stock market, which is about 40-45% of the value for the world as a whole. Different countries and different markets and sectors of those markets are doing better or worse.

As for the US overall, a lot of the overall value of the US stock market is contained in the top 5-10 companies. Which is great if those stocks do well in the future, not so great if they donít. An important thing to remember is that the stock market tends to be a leading indicator of the health of the overall economy. Also, some would argue it has tended to be divorced from the overall economy in recent days.

My opinion, and it is only my opinion and not generally/ universally shared here on the forums is that the US stock market overall is expensive as compared to the markets in other countries and has less upside potential. I donít have much invested in it. Iím trying for a lot more diversification outside the US. Our exceptionally poor response to COVID is just another reason that Iím reluctant to have much in the US markets.

YMMV.



GuitarStv

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Re: Covid and stock market
« Reply #4 on: July 20, 2020, 07:56:39 AM »
No.

dougules

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Re: Covid and stock market
« Reply #5 on: July 20, 2020, 11:34:00 AM »
That's a big maybe.  Some of the reason that the market is back so high is completely rational to reflect that interest rates are so low right now.  Some of it may be completely irrational unfounded optimism about the direction we're headed.  Only time will tell.

The real takeaway, though, is that I severely doubt that the economic effects of COVID-19 are going to be the news of the day in a decade or two.  If you're worried about what's going to happen over any timespan less than that, you probably shouldn't be fooling with equities. 

PDXTabs

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Re: Covid and stock market
« Reply #6 on: July 20, 2020, 12:33:06 PM »
The real takeaway, though, is that I severely doubt that the economic effects of COVID-19 are going to be the news of the day in a decade or two.

But just because COVID-19 won't be in the news in 10 years doesn't mean that it won't have taken a big bite out of GDP growth over the next 10 years.

dougules

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Re: Covid and stock market
« Reply #7 on: July 20, 2020, 02:11:01 PM »
The real takeaway, though, is that I severely doubt that the economic effects of COVID-19 are going to be the news of the day in a decade or two.

But just because COVID-19 won't be in the news in 10 years doesn't mean that it won't have taken a big bite out of GDP growth over the next 10 years.

True, but so have plenty of other crises in economic history.  The 2009 recession is still affecting us now.  That doesn't mean anybody should do anything differently other than maybe tone down their expectations a little for the next few years.  A crisis was coming sooner or later, and for most of us it's already built into the plan.  Nothing we're living right now is particularly new if you look back into history.