A Tale of Two Charts

Several weeks ago in my post, I wrote about how during the Global Financial Crisis of ‘08-‘09, investor’s risk appetite was almost 5 months behind the actual bottoming of the stock market.

Fast Forward to 2020, and the chart clearly illustrates a different scenario:

What’s interesting to note is that the VIX (the fear gauge) seemingly hit it’s high days after folks had peaked on their search for the term ‘stock market crash’.  Similarly, this occurred in 2008-9 as well.  However, one glaring difference is how fast people snapped back in ‘20 vs ‘09.  ‘09 took almost 5 months for investors’ search term ‘buying stock’ to exceed searches for ‘stock market crashes’, whereas in ‘20, it this happened in under 30 days.

This is a clear distinction between a crisis of the markets and a crisis impacting the markets.

So, does this mean we have bottomed?

Honestly I don’t know.  It’s definitely interesting to see how quick peoples’ sentiment changed over the past couple of months, but I think in the next 6-8 weeks that view will become a little clearer.  As the country begins to reopen, will there be another increase in cases?  Will doctors find themselves with a more robust toolbox of treatments? Do we get to phase 3 of a clinical trial for a vaccine?

All of these ultimately lead to the answer to this question: What type of economic recovery will we have? V, W, U, or L shape?

With this many consonants and vowels, one would think I am surely playing a game of Wheel of Fortune as I write this. I assure you I am not.

That will be a topic I will elaborate on more next week, as it deserves a post in its own right.

With that I wish everyone a Happy Belated Mother’s Day!

Disclosure:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The CBOE Volatility Index® (VIX®) is meant to be forward looking, showing the market’s expectation of 30-day volatility in either direction, and is considered by many to be a barometer of investor sentiment and market volatility, commonly referred to as “Investor Fear Gauge”.

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