In February 2020, the S&P 500 Index, which measures the share performance of the 500 largest companies on U.S. stock exchanges, reached an all-time high of 3,386.15. Then the Covid 19 pandemic emerged and the S&P 500 fell farther and faster than it had since the start of the Great Depression in 1929.
On March 23rd, the US Federal Reserve (their Central Bank) announced that there would be no financial limit to its willingness and ability to support the economy. The equity markets quickly reversed course and had its best 50 day run of all time and its best 100 days since 1933, resulting in the S&P 500 reaching a new all-time high of 3,389.78 on August 18th, six months (less one day) after the previous high.
Here are some thoughts on what the events of the last 6 months tell us about investing in equities:
1. The stock market can never be timed.
2. Declines similar in size, although not in speed, to the one we experienced in February and March are commonplace and will continue to be in future.
3. You can never be sure how a market crisis will end, but you can be sure it will.
4. Equities remain the only way most of us are ever going to achieve our goals.
5. Optimism remains the only realism.