Is March 2020 on the way to a comeback? - Walla! Of money

2021-11-27T21:35:30.069Z

The biggest market collapse on Black Friday since 1931 was caused by a panic from the Omicron variant, but does that mean we're on our way to dive?

Of money

Is March 2020 on the way to a comeback?

The biggest market collapse on Black Friday since 1931 was caused by a panic from the Omicron variant, but does that mean we're on our way to dive?

Psagot CEO Eyal Goren answers the burning questions before the start of the trading week

Indeed, Black Friday: World stock markets are collapsing following the discovery of the new variant

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The Madrid Stock Exchange collapsed on Friday.

What will happen on Monday?

(Photo: GettyImages, Gustavo Valiente)

What caused the sharp goal drops and what was all the fuss about?

Symptom of uncertainty.

Like humans, the financial markets hate uncertainty, and a resurgence of the corona plague with a new variant called "Omicron" is creating great panic.

The variant caught Europe unprepared and it can be understood that the citizens of the world have begun to write in their heads a pessimistic scenario about the ineffectiveness of the vaccine, while others try to maintain cautious optimism and say the worst is behind us, i.e. the vaccine is effective and excessive panic.

So is March 20 back in an upgraded version?

The answer is no.

One needs to refresh the memory and understand that there is a huge gap between how the market got a new virus and alarming mortality data in

March 2020, and what is happening today. The world came with a hysteria, perhaps justified, that was characterized by the closing of the sky, the entry into closures, the abolition of all congregations, and the dramatic damage to the economy, something we had not known before.

Today, the world feels more mature and experienced in the face of the plague, the ability to adapt to social changes like imposing restrictions, working from home, distance shopping, wearing a mask and that is even before we talked about having vaccines for the virus (which may be valid for the new variant). In addition, there is a drug treatment that is probably effective for any scenario for the simple reason, unrelated to the difference in the protein structure of the virus. So in the bottom line, there is nothing to compare the situation today to the situation in March 2020. The variant "Omicron" is reminiscent of the discovery of the delta virus that rules the world today and at the beginning was called the "Indian variant", and the world learned to live alongside it.

Will we learn to live alongside the variant?

Johannesburg airport this weekend (Photo: Reuters)

Is the panic justified?

Here, too, it is important to make order, and it is said "there is no wise man as one with experience."

The Delta virus was discovered as early as November 2020 (a year ago), March 21 became widespread and by June 21 managed to spread and rule the entire world.

Even then they said it was much more contagious, which turned out to be true, and some said the vaccine was ineffective, which eventually turned out to be incorrect.

Looking back, it can be said that the biggest difference between March 2020 and today is that it then took the world a year to make decisions, while this time, after several hundred verified in the world, many countries reacted quickly and closed the airspace, at least until they received more information.

Beyond the fact that most of the world is vaccinated, the ability of all of us to cope with an increase in morbidity, there are drugs on the way and the world responded quickly, one can learn that the rapid response will improve the world in relation to the Delta eruption (which does not resemble March 20) every).

Temporary decline or trend?

Eyal Goren (Photo: Rami Zranger)

Even after the markets' panic on Friday, almost all indices traded close to (very) high.

In fact, the markets are ripe for natural repair and the new variant trigger is an opportunity to get some air out and shake up the “stupid” money that has recently come in with the feeling that the market is always rising.

Therefore, it is likely that a correction of a few percent can take until the fog of uncertainty passes, and there is room to be vigilant and take advantage of the declines, if these continue, to improve positions, especially for those who have recently reduced risk and waited for this very moment.

The author is the CEO of Psagot Mutual Funds.