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Waking up After a Yearlong Coma

Updated: Sep 21, 2021

"Every once in a while, the market does something so stupid it takes your breath away." - Jim Cramer

The date is April 29th, 2019. You login to check the balance of your retirement account. The S&P 500 closes at 2,943, good for a gain of ~18% year to date. Feeling very confident about your investments, you close your broker's online portal and begin to peruse the news of the day.

U.S. unemployment rate near all-time lows

Trump takes aim at Democratic opposition ahead of 2020 election

Trump escalates trade war with China via Twitter

Brexit negotiations hit a snag

Nothing really catches your eye, it's more of the same tired stuff. You peek outside, wanting to enjoy the balmy spring weather. You excitedly spring out of your office chair, without looking, you trip and fall hitting your head on the office desk.


You slowly come to, awaking in a brightly light hospital room. The glare is blinding off of the clean, white walls. Your body is stiff and your movements are slow.

Upon seeing you're awake, the nurse summons the doctor to check your vitals.

"How do you feel?" the doctor cheeringly asks.

"Ok, I guess. What happened?"

"You fell and hit your head. Scary stuff. You've been in a coma for a year. It was dicey for a moment, but you're going to be just fine." - says the doctor.

You don't believe it. You scramble for anything to verify the date. You turn on the TV and button flail until you stumble upon the local news.

Sure enough, it's April 29th, 2020. You've been asleep for one year. You zone out and begin to process missing an entire year of life. Your trance is broken by the headlines on the TV screen.

Global pandemic wreaks havoc on world economy

Cratering oil prices put energy companies on the verge of bankruptcy

Real US unemployment rate hits 20%, 30 million Americans lose jobs

Are we headed for the second Great Depression?

Your heart is pounding out of your chest. This feels like a bad dream.

"Where are my personal belongings?" you ask the nurse.

The nurse points to the nightstand near your bed. You grab your smartphone. You feverishly check the balance of your retirement account. Your hands are shaking as you await the sure carnage that awaits.

You can't believe what you see. The balances are essentially the same.

Source: Ycharts

The above chart shows the 12 months change in the S&P 500. Despite everything changing, the S&P 500 is literally at the same level as April 2019.

Tough to reconcile? This might be the weirdest year we can remember. The gap between the real economy and financial markets seems to be growing by every daily uptick in stock prices. Here's a rough economic breakdown of the past 12 months...

Most of the global economy is completely shut down

Millions of Americans are furloughed, unemployed, or have had hours cut

Banks are setting aside billions in loan loss reserves in anticipation of coming defaults

Businesses are telling landlords they will not or cannot pay rent

Companies have withdrawn guidance at a record pace

Governments around the world are sending their citizens stimulus money

US Treasury bond yields have plummeted as investors seek safety

Gold is one of the best performing assets in 2020

State municipalities are facing huge budget deficits and a looming pension crisis

Global central banks are backstopping everything from high-yield bonds to outright buying of equities

The S&P 500 is virtually unchanged. Either the market knows something nobody can see or it's wildly wrong.

We're reminded of a famous quote from American financier Bernard Baruch...

"The main purpose of the stock market is to make fools of as many people as possible."

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