COVID19 Economic Recovery

Investment portfolios have seen a wild ride in the past year. The somewhat good news is that most diversified portfolios, as of today, are nearly flat to up over the last twelve months. The next question is, what will the remainder of 2020 bring us in terms of an economic recovery? Matthews Barnett, CFP ® provided a review of the market and GDP response to COVID-19 in his blog last week.  Here is a synopsis of what the largest asset managers are saying on their company blogs.


The initial response to COVID-19 was a market decline of 30-40% across the world, a similar response to the 2008 great financial crisis. Markets have recovered most of these losses due to government fiscal interventions. BlackRock is cautious about the virus returning in the fall, but believes the most bearish market performance would not come near what happened in the 2008 financial crisis, despite the initial shock. This is not a banking crisis and governments worldwide reacted much faster than in 2008. The biggest risk is policy execution; getting funds to the individuals and businesses that need it. Corporate insolvencies could create a financial crisis.

State Street

The US economy was on good footing prior to COVID-19. The best-case timeline for economic recovery will require testing being readily available by the end of May and June. Six vaccines are in human trials, 81 others are in development, thus getting a treatment option by Q1 2021 or sooner seems possible, but fully opening up the economy will need more accurate and widely available testing.


Vanguard refers to the COVID-19 market sell off as the “Great Fall,” with a two-phase economic recovery partly “v” then “u” shaped. Vanguard’s prediction is based on restrictions ending over the summer with different parts of the economy opening back up at different speeds. Getting the economy back to full speed could take two years. This means that the labor market may not return to pre COVID-19 levels until 2023. The Federal Reserve would therefore keep interest rates near 0% until then. Markets worldwide are being held up by government policies founded in a ‘whatever it takes’ approach. This is not another 2008 financial crisis. None of the predictions are inclusive of a fall shelter-in-place.

Warren Buffet

I add Warren Buffet to this list simply because his take on any economic event is always sought out. His guidance in 2008 brought reason to a very volatile market. I find it very interesting that he has been so quiet during COVID-19. At his recent shareholder Zoom meeting, Mr. Buffet reported that in April, when the market had fallen by 30%, his investment company bought and sold a net -$6 billion in stock. This includes liquidating all positions in his US airline holdings. His statement was that the virus has an “extraordinarily wide” range of possible outcomes and that the “world has changed” for the airlines. The big news was that the Oracle of Omaha was not buying stocks during the 30% selloff. Perhaps his friend Bill Gates has influenced him on the COVID-19 possibilities or he’s just investing like an 89-year-old should. His quietness is concerning.


A consensus amongst all the large money managers is that a fast recovery is possible IF the government can execute rescue plans efficiently, there are test readily available and the virus does not spike again. All of this has reinforced our current portfolio strategy of holding quality stocks and favoring US treasuries as a hedge to any surprise events. No one knows the future, but I would be ready for another market selloff and then a strong recovery. Americans know how to fight if we have to.

Casey T Smith

Posted 5/11/2020


Recent posts

  • Real Estate Syndication Investment Cautions: Insights from a Fee-Only Financial Planner

Share This Story, Choose Your Platform!

Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). As a registered investment adviser, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment adviser’s registration.

Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.

To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.

Sign up for our newsletter!

Our latest blogs, podcasts, and educational videos delivered to your inbox weekly.