As everyone with Sirius XM Satellite radio knows, channels are laser-focussed on specific content, whether it’s an all-Elvis, or all-Springsteen or all-Willy 24/7. So with the Coronavirus dominating the news, I half-expected to see an all-Corona channel on the air by Monday morning.
As it turned out, all channels are pretty much covering the topic-du-jour, sending markets plunging over 10% last week. Yet, when markets re-opened for trading this morning, investors piled back into equities, resulting in the best single trading day of the year. The broader markets ended up over 4%, while the bell-weather Dow closed up (that’s right, up) over 5%.
Now one day does not a trend make and it would be optimistic to think markets will settle down anytime soon and resume their inexorable march upward. But what we do know, is that capital invested when markets are lower has historically seen higher returns going forward. More, other shocks to the global economy have followed a similar pattern where significant gains are made 1-2 years following the event (see chart)
For those who wish a deeper dive into what we believe is the long term effect of Corona on the global economy and global stock markets, read this article <here.>.
We’ll see what the rest of the week holds in store, but if you’re listing to Sirius‘ 80’s on 8 and the Boomtown Rats’ Tell Me Why I Don’t Like Mondays is playing, you might want to shout -except Mondays like this!- every time the chorus is sung.
Source of The Chart is Mackenzie Financial.