Covid-19 Recovery: A Data-Driven Retrospective
An empirical look at the fastest bear market in history and the subsequent liquidity-fueled recovery that defied all expectations.
The Great Lockdown
In February 2020, the S&P 500 was trading at all-time highs. Within 33 days, it had collapsed by 34%. This wasn't just a correction; it was a complete liquidity seizure. The global economy came to a grinding halt, and the narrative was apocalyptic.
But what did the data say?
The Data of Despair
At the absolute bottom on March 23, 2020:
- VIX: Spiked above 80 (levels not seen since 2008).
- Oil: Futures briefly went negative.
- Sentiment: "The world is ending."
Yet, looking back through the lens of Market Memory, we can see that this was one of the greatest buying opportunities of the century.
The Recovery Velocity
Unlike the 2008 Financial Crisis, which took years to recover, the 2020 recovery was vertical. Why?
- Speed of Drop: The crash was exogenous (a virus), not structural (bad loans).
- Stimulus: Central banks printed trillions, effectively backstopping the entire asset class.
Lessons for the Future
The 2020 crash taught us that "Don't Fight the Fed" is more than a catchy phrase; it's a law of physics in modern markets. When liquidity is injected into the system, asset prices must rise to absorb it.
Stay tuned as we add more interactive charts to this case study.
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