MARKETS

Lessons From a Wild Four-Year Ride In The Stock Market

What do 1929, 1987, 2008, and 2020 have in common? They were all times when the stock market crashed, leading to some of America’s worst recessions, unemployment, and misery. Hard to believe, but it’s been four years since COVID caused the markets to collapse — which shut down the global economy. Looking back, it’s clear that it was one of the worst economic crises ever. But what’s remarkable is how quickly society has forgotten about it.

Trip down memory lane: On Mar. 16, 2020, US stocks faced their second-worst day in history — with the Dow Jones, S&P 500, and Nasdaq Composite dropping over 12% as investors digested the impact of the coronavirus. And then, before investors even knew it, the COVID-19 stock market crash was over.

• Between Feb. 14-Mar. 23, 2020, US stocks plummeted over 33% in just 24 trading days — marking the shortest and most volatile market crash in history.

• The 128-year-old Dow Jones Industrial Average fell over 26% in just four days — its worst span in history, surpassing famous crashes in 1929 and 1987.

Hindsight is 2020

Amid the mayhem, it was challenging to see that the stock market bottomed about a month after the crash — and few would have predicted that stocks would hit an all-time high six months later. You didn’t need to be a super genius to make money; you only needed some patience and a little stimulus from Uncle Sam. Here’s what we’ve learned:

• Timing the market is tough: The easiest way to buy the dip is to stick to a consistent investing plan, like dollar-cost averaging, that keeps you investing regularly regardless of market conditions.

• History repeats itself: Despite the chaos of COVID, those who thought “this time is different” and swore the market wouldn’t rebound missed out on a generational buying opportunity.

• Don’t panic sell: Fear, uncertainty, and doubt (FUD) are designed to make you sell, but those who panicked during the pandemic (or the subsequent bear market) likely missed out on the subsequent market boom.

So, how’s it going now? The S&P 500 and the tech-heavy Nasdaq-100 are 51% and 81% above their Feb. 2020 all-time highs, which preceded the COVID-19 market crash, respectively. In other words, if you stayed invested through the past four years, you’d be sitting pretty. And if you didn’t, let it be a lesson for the next cycle.

PARTNERED WITH BIRCH GOLD GROUP

The Sneaky IRS Tax Law that's Sweeping the US

Big banks and the IRS don't want you to know about the opportunity this IRS "Cheat Code" unlocks... That's not stopping it from sweeping the US…

LARGECAP RECAP

🏠 Blackstone says real estate has bottomed

Back in the 1900s, banker Nathan Rothschild famously said, “The time to buy is when there’s blood in the streets.” Fast forward 100 years, and Blackstone ($BX), owner of the world’s largest real estate fund, echoes a similar (although less exciting) message for real estate skeptics: the market has hit its lowest point, and it’s time to buy.

• According to Blackstone President Jon Gray, there’s limited competition for snagging “discounted assets” — making it easier to find good deals.

• Gray also notes that borrowing costs and spreads are dropping, and there’s a decrease in new construction projects worldwide.

Plenty of opportunities: Despite concerns about souring loans, Blackstone is optimistic about commercial real estate (CRE) and sees it as a “positive” for its fund. But CRE is full of deals… and Blackstone isn’t the only one jumping at discounts. Private equity firm KKR says its real estate credit pipeline had swelled to $15B in February, a ~33% increase from the 2023 average — a strong vote of confidence from real estate investors.

Markets & Economy

Reddit scraps CEO pay incentives, signaling IPO concerns: CEO Steve Huffman would’ve scored a hefty bonus if Reddit hit $25B in value, but that’s off the table now. Huffman can still earn $25M in stock options if Reddit retains a market value above $5B for 10 days straight. [Read]

Adobe ($ADBE) stock dips on lower sales: Investors are increasingly worrying that AI alternatives like OpenAI’s Sora are a major threat to Adobe. Meanwhile, Adobe has incorporated some AI tools into their products, but they don’t seem to be taking off yet. [Read]

Internet outage hits African nations: People reported outages in several countries, including South Africa and Nigeria — and speculation points to possible damage to an undersea cable. [Read]

Business & Wealth

Biden criticizes US Steel’s ($X) sale to Nippon Steel ($NPSCY): The $14.1B purchase of the Pittsburgh-based company could be bad news for unionized labor — a demographic Biden wants to win during an election year. So far, it’s unclear if he’ll block the deal or just suggest structural changes. [Read]

Realtors’ association settles: The National Association of Realtors resolved the investigation into colluding to keep realtor commissions high, making it easier for home buyers to negotiate fees with their realtors or forgo them entirely. [Read]

Ultra-wealthy dominate charitable giving: In yet another illustration of global wealth inequality, a new report shows that 400K people account for a third of the world’s charity — as the pool of donors shrinks but the total dollar amount of donations rises. [Read]

PARTNERED WITH STONK MADNESS

Last Day To Enter The Stonk Madness Competition

It’s free to play: Select your bracket from 64 stocks. The top 20 bracket-pickers will receive prizes.

Prizes include: Lamborghini Huracan, Tesla Model 3, Louis Vuitton Basketball and more.

Here’s how it works:

• Each day, two stocks will go head to head and the one that gains more by the market close will progress to the next round.

• For each one of your correct picks that advances to the next round, you’ll earn points.

Join the tournament

DIGIT OF THE DAY

29 Companies Defaulted This Year, Highest Since 2009

Three months into the year, and corporations are feeling the squeeze of default season. Rising interest rates and stubborn inflation are causing companies worldwide to miss debt payments at levels not seen since the global financial crisis, according to S&P Global Ratings.

• 29 companies have already defaulted this year, the highest year-to-date count for this period since 2009, when 36 defaults were recorded.

• Most of the defaults occurred in the US; companies in the healthcare or media and entertainment spaces accounted for 40% of the total in February.

Corps aren’t doing too bad: Despite the comparison to the financial crisis, many US companies are still posting strong profits. These robust corporate earnings have also propelled the stock market to new highs. However, while stocks have soared by 30% over the past year, company profits have only risen by 4% — indicating that companies might soon face a “profit recession.” Nevertheless, analysts at Goldman Sachs remain optimistic, believing that profit margins may continue to grow throughout the year.