COVID: Foreseeable Shock in Action

February 19, 2020: the S&P 500 hit an all-time high. Five weeks later, it had fallen 34% — the fastest drop of that size in history.

A virus that barely registered on Wall Street in January shut down the global economy by March. Airlines lost roughly 65% of their value. Cruise lines dropped even more. Many financial models had not accounted for a global shutdown, even though pandemic risk itself was foreseeable.

The twist: the S&P 500 was back to its pre-crash level by August 2020 — just five months later. Investors who panic-sold in March missed one of the fastest recoveries ever.