Welcome back to PSA Thursday, a mostly-weekly segment in which we talk about how to handle money, work, and life in the middle of a pandemic.
The majority of us have experienced a rapid change that’s affected every aspect of our lives, from work to our wallets to our health. We’re living in a world that was completely unimaginable two months ago. And we’re trying to handle increased responsibility in a time of high anxiety and high uncertainty.
These weekly PSA episodes are one of many ways in which we hope to help our community make sense of how to manage our limited resources – our money, our time, our energy – in the context of these rapidly changing circumstances.
Today, our focus is on money – specifically, the stock market.
Why did it crash in March? What effect did that have on us as a society? Why has it rebounded in the middle of a shutdown, and what does that mean? Are valuations too high relative to earnings?
How can we handle our investments and retirement savings at a time when the movements of the market seem irrational and unpredictable?
We explore these questions in today’s episode.
Here are the key points we cover:
- A historic overview of different bear markets and the varying long-term pain and damage they inflicted
- The three characteristics that determine or influence the impact of a crash: speed, severity, and duration
- Why the Great Depression was monumentally tragic (hint: it featured all three characteristics above)
- What the March 2020 crash looked like in comparison
- Everything sucks. Why the heck is the stock market at 2019 numbers? Why are valuations still high?
- The shutdown has negatively impacted fewer segments of the economy than we might assume
- The level of unemployment is disproportionate to the impact the closures have on overall GDP
- The action that separates strong, long-term investors from those who underperform in the market
Resources Mentioned:
- Morningstar’s Economic Impact Report
- Our free work-from-home pandemic productivity guide
- @paulapant – IG
- @affordanything – Twitter
