I interviewed Tom Miele, a change catalyst and senior investment advisor, about the stock market in relation to COVID-19. Tom advises high-net-worth entrepreneurs, celebrities, and foundations on a wide range of financial planning and investment objectives.
Read an excerpt from his interview below, or watch the video here.
My first question is around the current stock market prices. As a result of COVID 19, our economy has been severely weakened, unemployment levels are at all-time highs and we will likely not have a vaccine until next year at the earliest…. So why is the stock market surging ahead? It feels like it’s disconnected from reality!
“It’s interesting; on the surface, it doesn’t appear to have much rationale with the way the market is performing. The reality is most stock analysts focus on forward-looking expectations instead of past market conditions. They are ignoring company performances for 2020 an instead focusing on 2021 and 2022, which are expected to be good.
“In addition to this, there are some other positive factors in the market, for example, you have a very accommodative fed, you have strong fiscal policy support, low-interest rates, low inflation, and the economic results have been pretty good over the last couple of months. All of these have helped the market nearly recover all of its losses from earlier this year.
“As a data point, the S&P 500 dropped approximately 35% in mid to late March and as of yesterday, is down 2% for the year. It has come back to break-even, which is really quite amazing.
“I want to highlight some of the risks we see moving forward — we are not completely out of the woods just yet. Things like the November election and US/China tensions will cause significant volatility in the markets over the next several months. Unemployment is still north of 11% and the path of the virus remains uncertain with a vaccine unlikely to exist until 2021. So, the markets will remain volatile with material ups and downs in the months ahead.”
Thank you for sharing your insights, Tom.