Should you invest in the stock market during this pandemic?


Fact Box

  • On February 19, 2020, the stock market S&P 500 and Dow Jones were at a record high of 3,386.15 and 29,348.03 points respectively [1]. 
  • On Monday, March 16, 2020, the biggest one-day market plunge ever caused the Dow Jones Industrial Average to fall almost 3,000 points. Next to the 1987 “Black Monday” crash, this was the highest percentage decline as the Dow closed 12.9 percent down. Following suit, the S&P 500 index also fell 12 percent [2].
  • Since the coronavirus-related stock market March crash, the Labor Department reported a record-shattering 3.283 million Americans have filed for unemployment [3].
  • With an average annual return of 9.8% since 1928, the S&P 500, the Index Fund Advisors [4] calculates that it would require 2.7 years for S&P 500 to rise the depleted 28.8% and for investors to recoup the gains from the February 19 peak [5].

Davon (Yes)

Over the decades, the United States economy experienced great stock market highs and impactful lows. Those lows cause many to see drops in job security and incomes. The most recent low the United States experienced was the Great Recession of 2008 [1]. In the short run, investing during this pandemic amidst all this turmoil and social hardship may be difficult. But your future self will thank you for investing right now. 

Warren Buffet, one of the greatest investors, has a great, proven investment strategy: buy low, sell high [2]. The strategy instructs that investors begin investing while stocks are cheapest so the returns are high when you hold them for the long run [3].

Right now, with this pandemic occurring, numerous stocks have dropped due to people being fearful. The stock market itself is dropping precipitously. Economists are warning people a recession is on its way soon. 

As scary as this pandemic is, the opportunity to capitalize on the potential recession should bring some excitement to investors. The one thing about the economy is that it always balances out. Prior to this virus, our economy was doing great. Unemployment was low and salaries and jobs were 'secured'. This was an economic high after America went through a deep low in 2008. With the risk of another recession, stocks are available for cheap [4]. If you purchase and hold on to those cheap stocks, you'll greatly reap the rewards. Our economy has always recovered from a recession and that won't change. People should invest now while the opportunity is available. 

Taran Daniel Robert (No)

Due to the coronavirus pandemic, the worldwide economy has taken a dive. Over the weekend, the price of oil careened 25 percent, and stock-market futures plunged dramatically enough that the exchanges shut down. The entire United States Treasury yield curve fell below 1 percent for an historic first [1].

The crash is severely felt by individuals, retirees and dependents all around as governments enforce strict sheltering measures, resulting in economic shut down, to hopefully decrease the virus’s spread. The market could rebound as countries get the worst of the epidemic behind them and economic regulations are enacted. But which one? Nobody knows.

“After a crash of this magnitude, market confidence usually does not return quickly. So, it is better to wait for calm before taking big investment decisions,” says Anil Sarin, CIO - Equities, Centrum Broking [2]. In this volatile market, not even the experts can predict the long and short term changes. Generally, investing in the stock market is always a gamble. You would need to risk big to get a significant amount of money back.

According to stock market & trade author Mark Minervini: 'Trying to play breakout stocks in a market like this is greedy and foolish. Bottom fishing is also a dangerous game that few do successfully. Be patient; wait for stabilization' [3].

If you want the cash to work for your investments now, tuning out might be impossible. This is why financial advisers advocate selling equities and bonds as you pass towards retirement or to a fixed monetary intention.

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