There have been six bear markets in which the S&P 500 has suffered at least a 30% decline in the last 75 years (1945-2020), the latest being a one-month, 34% tumble ending 3/23/20. Following each of the six bears, the stock market eventually recovered 100% of the loss that had occurred, i.e., the index eventually closed back above the previous bull market closing high. The average time the S&P 500 took to recover back to a new record price after the first five bears was more than 3 ½ years (43 months), compared to just a five month bounce back needed after the bear market close on 3/23/20 (source: BTN Research).
One unexpected consequence of the pandemic has been its boost to the U.S. housing market. Urban residents, particularly in major American cities on either coast, have been driving a suburban buying frenzy as they leave the density of big cities. The New York metropolitan area had a net loss of 6,786 households during the second quarter 2020, while Los Angeles had a net loss of 6,347 households (source: RealPage).
The world production of crude oil was 101 million barrels a day in calendar year 2019. The pandemic caused a global collapse in oil consumption, forcing the major oil players of OPEC and Russia to implement an output cut of 9.7 million barrels a day in April 2020. The drop in demand also forced U.S. oil producers to cut output by 2.4 million barrels a day since mid-March 2020 (source: U.S. Energy Information Administration).
Notable Numbers for the Week:
- JUST A SELECT FEW- The NASDAQ Composite is up +26.9% YTD (total return) through the close of trading last Friday 8/21 /20. Just five stocks drive approximately 40% of the return of the cap-weighted index. The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system (source: NASDAQ).
- FIND A NEW JOB – An estimated 33% of the pandemic-driven layoffs in the United States that occurred from March 2020 through May 2020 will be permanent, i.e., the workers will never return to their old jobs at their former employers (source: Brookings Papers on Economic Activity).
- GATHERED EVERY MONTH – The calculation of our nation’s “consumer price index” is based upon pricing data collected each month from 22,000 retail stores (e.g., department stores, groceries stores, gas stations, and restaurants) across 75 urban areas nationwide (source: Bureau of Labor Statistics).
- GO BIG RED – Famous stock investor Warren Buffett turns 90 years old next Sunday on 8/30/20. Buffett, a 1951 graduate of the University of Nebraska, is worth $69 billion. Buffett has accumulated 84% of his net worth since he turned 65 years old, i.e., in the last 25 years (source: Fortune).
Mark R. Reimet, CFP®
CERTIFIED FINANCIAL PLANNER™