20 March 2020 - Stu Johnson (WEKU)
The director of the University of Kentucky’s Center for Business and Economic Research says predicting future profitability on Wall Street is particularly difficult with the current coronavirus crisis. Mike Clark added how information is processed is also hard to pin down.
One online report Friday morning prior to the opening on Wall Street pointed to the lock down decision in California as promising for trading. Clark said it’s all about interpretation. “What it could be is lockdown sounds really drastic, potentially bad for the economy because people can’t spend money, maybe what’s happening is the market is looking at that as a really strong policy to maybe finally get this under control. So, if they’re looking at it that way they might be seeing this as a very positive thing,” said Clark.
Clark noted it’s difficult to determine how long the coronavirus will impact the Stock Market, but lessons can be learned from the recession of 2008. “You know the stock market went down substantially and it took several years to come back to the same level. But, it did come back and of course you know it did very well in the following years. So, it does tend to come up but it can take a long time for it to come back,” explained Clark.
But, if past history is any indication, the recession of 2008 saw the stock market crash in the fall of that year. Wall Street didn’t fully recover until mid-2013.