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Today, 24 days into the COVID-19 sell-off, the S&P 500 is
down 32 percent. In 2008, at the equivalent point in the Lehman Brothers
collapse, the index was down 24 percent. It appears the current climate is
worse because fear of
the unknown is lasting longer. These unknowns include extreme
lack of clarity on the ultimate duration and spread of the virus and how to
mitigate its economic impact. The declaration of a national emergency,
massive support from the US Federal Reserve (as in 2008), and an immense
fiscal stimulus package making its way through the US Congress (also as in
2008) haven’t stopped the slide. For stock prices to stabilize and eventually
recover, money alone won’t do it. Greater clarity about how governments will
manage the crisis is badly needed.
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