Market Returns During Viral Pandemics
I hope that you and your loved ones are well. I thought that you might find the following interesting.
Market Returns During Viral Pandemics
The outbreak of the Coronavirus has had an impact on people’s investments. It can be helpful to gain some perspective by looking at the markets and how they have performed during the four major flu pandemics of the last 100 years.
The Spanish Flu, March 1918 to April 1919. An estimated one third of the world’s population (500,000,000 people) contracted the virus and 50,000,000 died with 675,000 deaths in the United States.
The Asian Flu 1957–1958. About 1,100,000 died globally, 116,000 in the United States.
The Hong Kong Flu 1968. About 1,000,000 died globally, 100,000 in the United States.
The Swine Flu 2009–2010. Between 151,700 to 575,400 people died globally.
In the United States, an estimated 60,800,000 were infected with 12,469 deaths.
So how did the markets perform during these time periods? In the chart below, you can see the returns of the S&P 500 broken out by time period.
|
The S&P 500 During Viral Pandemics |
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|
Pandemic Time Period |
Annual Returns During & After Pandemic |
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|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Average |
|
|
1918 – 1919 |
18.21% |
19.67% |
-13.95% |
10.15% |
29.07% |
12.63% |
|
1957 – 1958 |
-9.30% |
43.40% |
11.59% |
-0.74% |
28.51% |
14.69% |
|
1968 – 1969 |
11.03% |
-8.63% |
3.60% |
14.54% |
15.63% |
7.23% |
|
2009 – 2010 |
27.11% |
14.87% |
2.07% |
15.88% |
32.43% |
18.47% |
|
Average |
11.76% |
17.33% |
0.83% |
9.96% |
26.41% |
13.26% |
This table does not show the ups and downs that the market went through during the course of each year. What it does show is that the S&P 500 averaged double-digit positive returns annually during the 4 previous pandemics. Immediately following these pandemics there were varied outcomes, but the S&P 500 on average went up all 3 years following these events. This may be a difficult time for many people and it is impossible to fully predict what the economic fallout and recovery from this are going to be. But what the numbers are telling us is that – This too shall pass.
Sincerely,
Samuel Schaeffer