It’s honestly pretty weird to have a market crash that has such a simple explanation. An uncontained viral outbreak is endangering public health and disrupting economic activity. That’s the whole breakdown. It’s one sentence.
It would take me 5,000 words to explain the financial crisis from last decade and, even then, you’d have a list of follow-up questions. The ability to succinctly and confidently answer the question “why did markets go down?” is bizarre.
Speaking strictly financially here: I’ve heard a lot of suggestion that this time it’s different. Here’s the real inside information: It’s always different.
Here are several This Time It’s Diffferent™ events that have led to bear markets in domestic equities in the past: Unfettered lending, terrorism, the birth of the internet, an oil crisis, a single day in 1987, war, an extended period of high inflation.
In each case, markets flailed with uncertainty as participants grappled with how to handle events that generated a high degree of uncertainty and worry. What ended up not being different is that markets recovered from each of these This Time It’s Different™ events.
