Has the Stock Market Recovered Yet From COVID?
We just cleared a significant milestone on August 18th. The S&P achieved a new high.
Of course, you know why this is important. But let’s recap what happened for 2020.
The market crashed due to fear and the strangulation of the world economy from COVID. The S&P experienced a 34 percent drop, the NASDAQ went down 31 percent, and the DOW dropped 38 percent and was at its lowest on March 23rd. Check out the graph of the DOW below.
The first index to recover was the NASDAQ, and it did so on June 8th, 2020. This is quite phenomenal when you think about it. It took only 77 days to do this, which is about two and a half months. It continues to make new highs and is currently about 14 percent above the old high.
The S&P took 148 days or about four and a half months.
But the DOW is lagging, it has not yet recovered fully and is 6 percent below its previous high before the crash.
To give you some context with other crashes, consider the table below of crashes and their recovery times.
| Name | Magnitude of crash | Recovery time |
| 2020 corona crash | Dow: 38% drop | ? |
| 2010 flash crash | Dow: 10% drop | 7 months |
| 2008 economic crisis | Dow: 54% drop | 5 years |
| 2000 dot-com bubble | Nasdaq: 78% drop | 16 years |
| 1987 Black Monday | Dow: 37% drop | 2 years |
| 1929 Great Crash | Dow: 89% drop | 25 years |
If the DOW recovers before seven months, it will be the fastest recovery for all the major crashes, which would be unprecedented.
When the market goes up too fast, it may experience a nosedive. In this case, I am not sure if the market is going up to fast. Are you? Will this be the W shaped recovery that investors often talk about? Right now, it looks like a U shaped recovery.
In any case, it would be wise to think about protecting your investment for the next crash, whether it is sooner or later.
You might be interested in my newly updated book, Crash Proof Your Investment, which offers eight protection methods to consider. It usually is $9.99, but until the end of August 2020, it will be 99 cents. Check it out at the link below:
Crash Proof Your Investment by Dr. Paul Keller
That is all for now.
Good Luck Investing.
Dr. Paul Keller
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