The current COVID-19 pandemic has caused severe economic consequences. On June 8th, The National Bureau of Economic Research (NBER) officially declared a recession in February 2020. 

The NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

This is the first U.S. recession since the Great Recession, which began in December 2007 and lasted until June 2009. Nearly 22 million Americans are currently receiving unemployment benefits due to the pandemic, which is about 13% of the labor force. The total number of unemployed exceeds twice that number, according to research by Forbes.  Additionally, retail sales experienced the biggest monthly decline in history and the economy seems vulnerable and susceptible to crash anytime. 

The pandemic has also hit the stock market hard. At the start of the COVID-19 crisis, a sell-off in tech stocks led to the worst trading period for the Nasdaq since mid-March. Economists predicted stock market crashes and recessions from the beginning of the pandemic. 

However, as the stock price plummeted, individuals started investing in core companies. They sought a bigger net benefit of money, assuming the market would go back to normal. That prediction turned out to be right. Tech companies’ share prices have soared this year, far ahead of the rest of the market. 

Likewise, on June 8th 2020, the S&P 500 index which is “a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States,” was back to where it was at the beginning of 2020. The market sprung back to normal as if the dramatic plunge of the economy wasn’t real and nothing had ever happened.

 This reaction of stock markets raises serious concerns. This uncertainty about the market has brought more individuals into the investment market who are trying to seek profits from the substantial increase in the stock value. Since the beginning of the crisis, stock prices seem to be experiencing high volatility; in other words, they are very unstable. However, factors such as the intervention of central credit facilities and government guarantees, lower policy interest rates, and lockdown measures alleviated the plummeting of stock prices and returned the stock market back to normal. After the economy rebounded, they made vast profits as the value of the stock kept rising.

An anonymous student at MHS stated that they have made a profit through investment during the COVID-19 crisis. 

“I earned around 16 percent of my initial investment, which is about $8 from the initial $50 I invested,” the student said. 

 In terms of a greater amount of cash, that means if one invested $1000 to the same company they would have earned $160 in addition to the initial investment, which is a huge net benefit of money. 

However, professionals recommend that one carefully consider which company to invest in and to also think about how long they are willing to hold the stock before selling.

Dennis Lynch, a head of Counterpoint Global at Morgan Stanley Investment Management said, “We don’t want to get too crazy [about the stock behavior during this crisis] because too many large conclusions can be a mistake. We’re making very few changes. The real theme is to remain open and flexible about what’s going to happen next and not get too convinced of anything.” 

Lynch also stressed the importance of a long-term investment strategy, which can serve as a guiding principle through the uncertainty in the stock market during the pandemic. 

He said, “We’re not making tactical changes; we’re continuing to make long-term decisions. We’re going to continue to own the companies we think are the best-in-class for the next five to ten years and that have significant upside from here.”

Investment does definitely look like an appealing way to make money quickly, but it is also obvious that basic information about the stock market and business are needed in order to invest wisely. Active interest in the economy and international relationships between countries’ industries is the key to becoming a professional investor.