This is now the ninth worst stock market crash since 1896

Have we seen the bottom yet?

As I wrote a few days ago, the last few weeks as an investor have been a combination of “oh god I’m never going to be able to retire” and “oh god I’m going to die in a global pandemic.” While these problems are mutually exclusive, the pain on the market side has gotten even worse since then:

We are right on the heels of the dot-com crash. After that, it’s basically the fallout from the 1973 oil crisis and a bunch of stock market panics from the early 1900s. There is still a bit of crash to go if this is going to enter the top three and live in infamy alongside the Financial Crisis and Great Depression.

While I certainly hope it doesn’t get there, I have noticed that it seems popular among financial commentators lately to throw around the word “depression.” As if “pandemic” wasn’t enough to trigger overwhelming existential dread, it’s like people want to add even more fear to the fire. I mean, at this rate, I feel we are going to have to one up “depression” and start using phrases like “giant meteor” to add even more panic.

No one is questioning the immense biological, economic, and psychological toll COVID-19 is having on society. But, to me, “depression” feels a bit drastic. And, that’s not to downplay that things are bad and will continue to be bad. But we aren’t anywhere close to depression levels from an economic standpoint or a market loss standpoint.

To match the -89.2% loss from the February 12 Dow peak of 29,551.42, we would need to go to 3,191.55. To put that into perspective, you’d have to see stocks fall to levels seen at the bottom of the Financial Crisis…and then fall by another 50%…and then fall even more. Ouch!

Even with the pain of the last few weeks, that only matches the early stages of 1929. That was just the beginning of a three year economic and financial disaster.

I’ve heard some people talk about “18-month” coronavirus scenarios and “reoccurring yearly outbreaks” but those are still considered fairly severe downside scenarios as opposed to certainties. There is still so much we don’t know.

So, while there is likely more pain to come financially and certainly more pain to come from an outbreak perspective - we don’t need to be masochistic and jump to talking about the Great Depression 2.0.

At least, that’s just my opinion based on where things stand today. If that turns out to be wrong, well, I guess you can say “I told you so” when we see each other on the socially-distanced bread lines.


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