Good morning and happy Monday!
“Individuals who cannot master their emotions are ill-suited to profit from the investment process.”
– Benjamin Graham, American economist, 1894-1976
My friends, 5 years ago yesterday, Monday, March 23, 2020, marked the bottom of the COVID-19 stock market crash. This is now my 3rd memo about that correction in 5 weeks, but it is just so ripe with lessons that I will kindly ask you to indulge me just one more time.
COVID-19 caused the world to turn upside down and the markets decided to take a rollercoaster ride wilder than anything at any of our beloved Florida theme parks.
So, today we mark the 5-year anniversary of the COVID-19 market crash – a moment that tested our resolve, our portfolios, and our ability to binge-watch Netflix without losing our minds. I thought it’d be a good time to reflect on where we’ve been, where we are now, and what we’ve learned along the way.
Let’s set the scene: February 18, 2020. The S&P 500 hit an all-time high of 3,386.20, and life seemed rosy. Then, faster than you could say “hand sanitizer shortage,” the bottom fell out. By March 23, 2020, the S&P 500 had plummeted to 2,237.40—a jaw-dropping 34% drop in just over a month. It was the fastest descent into bear market territory (a 20%+ decline) in history, taking only 23 trading days. For context, the Great Financial Crisis of 2008 took months to hit its low. This was a financial freefall with no parachute in sight—or so it felt.
I know we all remember those days vividly: patience was running thin, toilet paper was running low, and the media was stirring up as much panic as humanly possible.
But here’s the kicker: that low point on March 23, 2020 (5 years ago yesterday), wasn’t the end of the story … it was the beginning of an incredible rebound.
Fast forward to today, March 24, 2025. The S&P 500 closed at 5,667.56 on Friday (March 21, 2025) – markets move fast, so this is a snapshot. That’s a staggering 153% increase from the March 23, 2020, low of 2,237.40. Let’s break it down:
- 2020 Recovery: By August 2020, the S&P 500 had already clawed its way back past its February high, closing the year at 3,756.10 – a 67.9% gain from the bottom and a total return of 18.4% for the year, including dividends.
- 2021: The rally continued with a 28.7% total return, ending at 4,766.20.
- 2022: A “hiccup”: markets dropped 19.4% to 3,839.50 as inflation and rate hikes spooked investors. (Even the markets can’t handle rising grocery bills.)
- 2023: A 26.3% rebound to 4,769.83, proving resilience is the name of the game.
- 2024: A blockbuster 23.3% gain, closing at 5,881.63, driven by AI enthusiasm and a strong economy.
Over five years, that’s an annualized return of roughly 14.3% (assuming dividends reinvested), turning a $10,000 investment at the March 2020 low into about $20,200 today. Not too shabby for a market that looked like it was auditioning for “The End of the World: Wall Street Edition.”
This wild ride wasn’t just about numbers—it taught us some big lessons. Here are five key takeaways to keep in your financial toolkit:
- Markets Are Resilient (Even When We’re Not)
The S&P 500’s 34% drop felt apocalyptic, but its recovery was fueled by unprecedented stimulus – trillions from the Fed and government – and human ingenuity (think vaccines and Zoom happy hours). Lesson? Markets can bounce back faster than a rubber ball, even when the news cycle screams doom. - Panic Selling Is a Portfolio’s Worst Enemy
Those who sold at the bottom locked in losses and missed the 70%+ gain by year-end 2020. It’s like leaving a party right before the cake comes out. Timing the market is a fool’s errand – staying invested through the storm paid off. - Diversification Isn’t Dead, It’s Just Sneaky
While the S&P 500 soared, not every sector did equally well. Tech and AI stocks led the charge, while energy and financials had their moments too. Bonds played a quieter role in 2020’s recovery than in 2008, but a balanced approach still smoothed the ride. - The Best Days Follow the Worst
Data shows the S&P 500’s biggest gains often come right after its ugliest drops. Miss the 10 best days in a decade, and your returns get cut in half. In 2020, March 12 (-9.5%) was followed by March 13 (+9.3%). Lesson? Buckle up and stay seated. - Long-Term Goals Trump Short-Term Noise
Whether it was COVID, elections, or inflation, the headlines screamed chaos—but the market kept climbing. Focusing on your goals (retirement, that dream beach house, etc.) beats obsessing over daily dips.
2020 was the year we all became amateur epidemiologists, bakers, and stock market analysts. The market’s recovery reminds us that even when life feels like a bad sitcom, the plot can still have a happy ending.
As we sit here in 2025, the S&P 500’s recent highs are exciting, but they come with a caveat: valuations are lofty (think P/E ratios near record levels), and volatility could be lurking. Trade tensions, inflation, or a tech hiccup could shake things up. But history tells us corrections—10% drops—happen about once a year, and bear markets (20%+) are rarer. Since 1929, only 22 of 56 corrections have turned into bears. So, we stay vigilant, not paranoid.
Your portfolio is built for the long haul, and we’re here to tweak it as needed – whether that’s rebalancing, tax strategies, or just updates based on life changes. If there is anything on your mind where I can be of assistance, please never hesitate to reach out.
Five years ago, we couldn’t have predicted this journey: from a 34% S&P 500 crash to a 153% climb, with twists, turns, and a global pandemic in the mix. It’s a testament to resilience – yours, mine, and the markets.
Thank you for trusting me to navigate this with you, it is an honor beyond description.
Here’s to more growth, fewer face masks, and maybe a vacation to celebrate it all. 😊
Make it a great week ahead!