Anniversaries are traditionally a reason to celebrate. Yet, as we approach the one-year anniversary of the S&P 500 index hitting its 2020 low of 2,191.86 on March 23, 2020, I find myself relieved, tired and excited all at the same time.
I took this screenshot of my Bloomberg screen on March 16, 2020 to capture the S&P 500 down almost 12%, which we now know to be the third worst day in history.
Even during the Great Financial Crisis of 2008, I had never seen a down day of this magnitude. Maybe I was saving that screenshot for posterity, or regret… time would tell, I thought. Fear was extreme during that time and none of us would have thought a year later we would be talking about a market at new highs. From 2,191 to 3,936 is a price appreciation of almost 80%.
As we have highlighted before, some of the biggest market down days are usually accompanied by the biggest market up days. Along with March 16, the S&P 500 also fell 9.5% on the 12th and 7.6% on the 9th. Conversely, the S&P 500 gained 9.4% on the 24th and 9.3% on the 13th. Investors trying to time these can easily be caught on the wrong side of the trade.
Since that market low in March, the market has steadily marched on the back of tremendous fiscal and monetary responses as well as the on-going progress with vaccinations. Our view on the “K” shape economic recovery continues and may take a couple of years to fully heal. Despite the human cost to this pandemic, we should praise the resiliency and courage of front-line workers, friends and family. As the table below shows, some measures of the economy have fully recovered while others are still recovering.
Thankfully, gone are the days of hunting for toilet paper. Nowadays, most businesses are thinking about ways to safely bring back their employees and investors are adjusting portfolios to an ever-changing environment. Reflationary forces have reversed the course of lower interest rates and the extreme relative performance of growth stocks. Reflecting on how the last year has changed our physical and emotional states, one must also reflect on how allocations to different asset classes should change as well.
As we move ahead, I am excited about not being tired and anxious anymore. I need to lose the few pounds I gained last year, and I look forward to a “normal” family vacation. I am ready to celebrate!
If you have any questions or want to have a conversation about the market or your portfolio, please contact Liz, Ed, Fred, Scott, Tyler, or myself. Your Sendero team is ready to help.
Amaury de Barros Conti, Partner | VP Research & Strategy