The COVID-19 crisis has been devastating in many ways. In addition to the human toll, there is of course a big economic impact from having everyone stuck at home for months at a time. We will leave the science, vaccine and health debate to the experts. After all, this is a financial column. So, let’s see what investors can learn from the current stock market, economic and financial fallout from the crisis.
You can’t time the market
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Really. You can’t. If investors take away anything from the crisis, it should be this: You can’t time the market. Now, most market experts have been telling you this for years, but if you don’t believe it now, you never will. In March, as the severity of the crisis became clear, markets plunged. Everyone — and we mean everyone — expected a very weak stock market, as businesses closed and consumers stayed home in droves. Entire industries such as travel were decimated. How could the market do well in such a time? Investors en masse “went to cash” and prepared for a long market disaster and weak investment returns. Then … there was a giant rally. The market is pretty good at making all the “experts” look like fools. Don’t try to pre-guess what it might do.