The "bear" times... Bear markets represent periods of decline, but they also represent our state of mind a year ago: "hoard and hibernate." We're revisiting the grizzly fall, the stunning rise, and where we might go from here.
- February 19, 2020: We're still working from the office, our face masks are made of charcoal serum, and the S&P 500 is at a record high.
- March 11: The WHO officially declares Covid-19 a pandemic, and the US enters a bear market. The Dow closes 20% below its most recent Feb. high.
- March 23: The lowest low. For the year: the three major stock indexes (the S&P 500, the Dow, and the Nasdaq) are each down ~30%. The S&P and the Dow are lower than 2018 levels.
The "bull" times... It's always darkest before the dawn — for markets, dawn started at the end of March. Congress unleashed trillions of $$$ worth of stimulus spending and the Fed gave us near-zero interest rates, making stocks more attractive. And people realized that Big Tech had a big pandemic advantage. By mid-May, the Nasdaq had recovered all of its 2020 losses. By August, stocks were back at all-time highs, with Big Tech shares leading the surge.
- The present: This month, tech stocks fell into "correction" territory thanks to rising interest rates and inflation fears — bringing the market down with them. But the S&P 500 is still up more than 40% over the past year. The Nasdaq is up a whopping 64%.
Two roads diverged in a non-mellow market... and we don't know which one investors will choose to travel by. The bear case (bad for stocks): interest rates have risen, the new $1.9T stimulus is raising inflation fears, and Big Tech is losing its pandemic edge as the economy reopens. The bull case (good for stocks): the Fed says it won't raise rates any time soon, the upcoming stimulus package could bring economic healing, and the vaccine rollout is well underway. After the '08 financial crisis, inflation fears were high — but it never came.