COVID-Panic’s Lockdown-Low Anniversary

Six years ago Monday, a bull market began during a frightful time. No one that day could confidently know that on March 23, 2020 global stocks, down -34.0% in less than five weeks, had troughed.^[i] Thousands were dying daily as the COVID-19 pandemic—which eventually killed more than seven million people—tore through the world, and American states had just begun locking down.^[ii] Nevertheless, stocks started rallying and never looked back. What lessons can investors glean today as panic over Iran and oil persists?

The pandemic’s sudden onset—and lockdowns that followed—revealed how data are backward looking and forecasts aren’t ironclad. Early-2020’s bear market ended before traditional data showed lockdown’s brutal economic effects. The first report came March 24, 2020, when S&P Global’s flash March US composite purchasing managers’ index (PMI) slid to 40.5 from February’s 49.6—its biggest one-month drop since October 2009.^[iii] Given readings under 50 indicate contraction, this indicated a sharp, sudden fall in activity. Two days later, initial jobless claims showed over three million newly out of work, almost five times October 1982’s previous peak.

These figures, while stunning, didn’t deter stocks. There was no all-clear signal any investor could point to marking the bear market’s trough. Why? Markets pre-price widely expected events and worst-case scenario forecasts, then rebound faster than people think as they start fathoming a better future. In COVID’s case, as markets saw lockdowns spreading to America, they quickly priced the potential economic implications. That set the stage for recovery as clarity gradually arrived, showing reality wouldn’t be even worse than what stocks already discounted.

So what did stocks see from March 24, 2020 onward? While severe economic contraction did occur, it was nowhere near the worst-case scenarios markets had priced. By March 2020’s end, economists expected Q2 GDP to shrink by a third (annualized)—and the more pessimistic among them saw Q3 and Q4 contracting further. In reality? Q2 2020 GDP fell -28.0% annualized, Q3 rebounded 34.9% and Q4 gained 4.6%.^[iv] Keep in mind, too, those rough readings came out a month after the fact. Stocks priced Q2’s unprecedented economic downturn in Q1 and before the quarter was out recognized reality would exceed panicky expectations, allowing markets to find their footing after pricing those initial fears.

In times of trouble, it often seems darkest before the dawn, but that is when stocks shine. It stems from their day job: Looking relentlessly forward at how reality 3 to 30 months from now is likely to land against current expectations. Nowadays, economists are batting around worst-case scenarios of oil crossing $200 and staying there—with severe economic consequences.^[v] How likely is that given the world is already adjusting to oil supply bottlenecks and the global economy has repeatedly shown resilience to expensive crude?

Another parallel to consider: everyone’s apparent fixation on Just One Thing to the exclusion of all else. When a natural disaster—and seeming “economic earthquake”—like the global pandemic hit, wall-to-wall, 24/7 coverage of all-things COVID was certainly understandable. But what everyone knows—and headlines blare—isn’t helpful for investors. Markets pre-price all of it.

Now, it is worth paying attention to gauge moods. Sentiment drives markets short term. As Benjamin Graham famously observed, the market is a voting machine for a short-run popularity contest, amounting to mostly noise.

But in the long run, markets are a weighing machine, focusing on fundamentals and separating fact—like actual earnings for the foreseeable future—from prevailing sentiment. To make money, keep a cool head and train your gaze further out at what most folks aren’t noticing. The world didn’t end up revolving around COVID and neither, in time, will it hinge on Iran—what are people ignoring that drive stocks nonetheless?

Besides COVID’s lockdown-low anniversary, we are also coming up on a year since April 2, 2025’s “Liberation Day” tariff announcement. Now, that didn’t precipitate a bear market—the Liberation Day correction (sentiment-driven -10% to -20% pullback) ended four trading days later on April 8. Meanwhile, today, global stocks have yet to even enter a correction since their February 25, 2026 high. But we see notable similarities between tariffs and Iran, like their rampant worst-case scenario projections.

In Liberation Day’s wake last year, headlines warned of global trade collapse as tariff rates spiked to levels last seen under 1930’s Smoot-Hawley Tariff Act, helping precipitate the Great Depression. But markets turned as President Donald Trump paused most reciprocal tariffs for 90 days on April 9, leading to US stocks’ 9.5% price jump, their ninth-biggest up day in history.^[vi] Tariffs eventually arrived, but reality went better than worst-case projections as deals took shape, exemptions abounded and tariff rates proved lower than feared.

This time, talk of $200 oil, years-long natural gas shortages, raging inflation and recession (stagflation) litter financial news. As markets price all these things, it wouldn’t take much for reality to exceed expectations, whether via hostilities ending faster than people project, oil and gas prices easing, the global economy proving resilient at higher prices or, or, or. The tariff saga also shows a lack of clarity doesn’t deter stocks. Seeing things start to surpass sour sentiment—and deliver upside surprise—is generally enough to help markets price a better future.

History is replete with events, one after another. But there is precious little genuinely new under the sun. Markets have encountered similar circumstances before and studying them strongly suggests: This too shall pass.