COVID-19 Is the Risk You Didn’t See Coming; Rethinking Safe-Haven Assets in a Post-COVID-19 World

COVID-19 was officially declared a pandemic on Wednesday, March 11 and the declaration coincided with the official start of the bear market with equity indexes crashing more than 20% from their February highs. More accurately, the stock market transitioned from a record high to descend into a bear market in just 19 days. Of course, we told you all about this on February 27th when the S&P 500 Index was trading around the level in an article titled “Recession is Imminent: We Need A Travel Ban NOW”.

According to Ryan Detrick, an analyst with LPL Financial in a chat with Fortune,we’ve never seen [the Dow] go from an all-time high to a bear market this fast” since the index’s inception in 1896… As the shock occurred and shut everything down, the resurgence of turning everything on is going to have a classic V-shape, so we’re on the downswing right now.”

Here’s how the stock market has fared so far

The chart below shows how major U.S. tech stocks have fared in the year-to-date period. The stocks started with wins straight out of the gate to start Q1 2020 on a positive note but the momentum didn’t last through the second month of the year. By the end of the quarter, Alphabet Inc.(NASDAQ: GOOG) was down 17.89%, Apple Inc. (NASDAQ: AAPL) was down 17.79%, and Microsoft Corporation (NASDAQ: MSFT)was down 2.45% while Amazon.com Inc. (NASDAQ: AMZN) managed to recover from the decline to score 3.18% gains.

The reason for the marginal decline in Microsoft and the slight gain in Amazon has been attributed to the increase in the use of the former’s solutions in working from home and the fact that the latter manages e-commerce for essential goods.

Interestingly, the market crash wasn’t limited to equities as the prices of different commodities also crashed steeply during the period. As seen in the chart below, the price of Brent crude and West Texas Intermediate has declined by 16.49% and 15.46% respectively in response to reduced demand for oil as the global…

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