High Level Rules: 240) Past Pandemics Effect on Stock Market

240) Past Pandemics Effect on Stock Market

Here is a compilation of past pandemics effect on Stock Markets Performance.

A) Major bear markets since the one that began in 1929, triggering the Great Depression:

Bear Market Start	Bear Market End	Approximate Duration	S&P 500 Decline
September 1929	June 1932	33 months	86.2%
March 1937	April 1942	61 months	60%
May 1946	June 1949	37 months	29.6%
August 1956	October 1957	14 months	21.5%
December 1961	June 1962	6 months	28%
February 1966	October 1966	8 months	22.2%
November 1968	May 1970	18 months	36.1%
January 1973	October 1974	21 months	48.2%
November 1980	August 1982	21 months	27.1%
August 1987	December 1987	4 months	33.5%
July 1990	October 1990	3 months	19.9%
March 2000	October 2002	19 months	49.1%
October 2007	March 2009	17 months	56.8%

DATA SOURCE: S&P DOW JONES INDICES DATA, VIA KIPLINGER.COM.

Source: https://www.fool.com/retirement/2018/11/18/a-market-crash-is-inevitable-heres-what-to-do.aspx

B) Surviving the coronavirus crash: ‘You make most of your money in a bear market; you just don’t realize it at the time’

Stock prices today are the transitory opinions of Mr. Market, who often is emotionally unstable. Mr. Market did not carefully value your companies today and decide they are now worth less. No, he woke up in a panicked mood and indiscriminately marked them down as if they were overripe bananas at the grocery store.

The stock prices on your screen now say nothing about what these companies are worth. Nothing at all. But valuation is all that is going to matter in the long run. I promise you one thing: the value of your companies doesn’t change 8%-10% a day, day after day.

Source: https://www.marketwatch.com/story/advice-for-the-coronavirus-crash-you-make-most-of-your-money-in-a-bear-market-you-just-dont-realize-it-at-the-time-2020-03-18

C) How the stock market has performed during past viral outbreaks.

Historically, Wall Street’s reaction to such epidemics and fast-moving diseases is often short-lived.

According to Dow Jones Market Data, the S&P 500 posted a gain of 14.59% after the first occurrence of SARS back in 2002-03, based on the end of month performance for the index in April, 2003. About 12 months after that point, the broad-market benchmark was up 20.76% (see attached table):

EPIDEMIC	MONTH END	6-MONTH % CHANGE OF S&P	12-MONTH % CHANGE OF S&P
HIV/AIDS	June 1981	-0.3	-16.5
Pneumonic plague	September 1994	8.2	26.3
SARS	April 2003	14.59	20.76
Avian flu	June 2006	11.66	18.36
Dengue Fever	September 2006	6.36	14.29
Swine flu	April 2009	18.72	35.96
Cholera	November 2010	13.95	5.63
MERS	May 2013	10.74	17.96
Ebola	March 2014	5.34	10.44
Measles/Rubeola	December 2014	0.20	-0.73
Zika	January 2016	12.03	17.45
Measles/Rubeola	June 2019	9.82%	N/A
			—Source: Dow Jones Market Data

Source: https://www.marketwatch.com/story/heres-how-the-stock-market-has-performed-during-past-viral-outbreaks-as-chinas-coronavirus-spreads-2020-01-22

D) Do’s and Don’ts for the Next Bear Market

Source: https://www.schwab.com/resource-center/insights/content/dos-and-donts-next-bear-market

E) Selldown continues as political tension, virus weigh

Source: https://www.klsescreener.com/v2/news/view/645882/selldown-continues-as-political-tension-virus-weigh

F) The Stock Market Has Caught a Virus

How did the market perform during epidemics like this?

The stock market was quite immune to the epidemics in the last two decades.
Since 2000, Swine Flu outbreak in 2009 was the worst pandemics which claimed over 200k lives worldwide and 4k lives in the US alone. However, the S&P 500 Index rose 36% in the 12 months after the outbreak started in April 2009.

Source: https://www.myerscapitalmanagement.com/the-stock-market-has-caught-a-virus/

G) “SARS” Versus “Wuhan”: The Difference Between “Now & Then”

With the stock market perched near all-time highs, it is understandable investors are quick to dismiss the potential ramifications of the virus very quickly. There is also plenty of anecdotal evidence to support the bullish claims as well. The chart below is the S&P 500 index versus its exponential growth trend with a history of the more important viral outbreaks notated.

Throughout history, markets have always seemed to bounce back from deadly viral outbreaks. However, long-term charts tend to obfuscate the damage done to investors who have a much shorter investment time horizon.

Source: https://realinvestmentadvice.com/sars-versus-wuhan-the-difference-between-now-then/

H) US Bear & Bull Markets Since 1926

A look at bear and bull markets through history

With the stock market officially in a bear market, here’s a look back at each decline of at least 20% since the 1930s to see how long, and how severe, such downturns typically are.

Here’s a chart of the S&P 500′s returns in bull and bear markets: