Opinion | The stock market's coronavirus-driven drop could be just the start. By DanielAlpert.
The stock market's sell-off was triggered by the coronavirus concerns, but the ingredients for a drop were already there.
So it was with commercial real estate defaults in the late 1990s, with Japan entering recession at the peak of the dot-com bubble in 2000, and with residential mortgage delinquencies in 2008. So it has been with the global concern over the novel coronavirus designated COVID-19. Something, even an event wholly unrelated to the market bubble, is always the immediate trigger of a meltdown., well before the ongoing viral crisis took hold of investors' – much less the world's – attention.
After all, in both 2003 and 2014 equity markets were a mere 30 months and 4.8 years, respectively, from their prior pre-recession highs, and 42% below and 23% above those prior highs, respectively. This leads to the conundrum voiced to me so often by frustrated investors: "what else are you going to do with your money?" Until very recently, for many, the answer appeared to be to wager it on additional valuation expansion in equities. I say valuation expansion because we clearly have not been seeing either rapid economic, nor any broad earnings, growth for over a year that could have justified prices paid for stocks.
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