The S&P 500 (INX) fell 12% overnight and Donald Trump made a number of social distancing recommendations to Americans. He warned the US may be headed for recession.
When you add the 12% fall to the rest of the falls since 21 February 2020, the S&P 500 is now down around 29%. It took the GFC close to a year to knock 30% off the S&P 500.
Before today, the S&P/ASX 200 Index (ASX: XJO) had already fallen by 30%. In less than a month!
Aside from "Black Monday" in 1987, there really has been nothing like this in history. The falls have happened week after week. And we're only at Tuesday, who knows what's going to happen next!
The thing to remember is that after 1987 it only took two years to recover. It took a few more years to recover after the GFC, but there was a recovery.
Only time will tell how long it takes for this to wash through. China has proven that you can get the infection under control with strong measures – western countries aren't going to be quite as draconian, but Europe is now heavily restricting social interaction. In China people are going back to work, but their temperature is apparently tested every time they enter a building like a shop or office. They are keeping a good check on the coronavirus.
The share market decline has been swift. Does that mean the recovery will be fairly quick too? It's hard to say. Perhaps months of pent-up demand for products and services will see the economy come roaring back, as long as there isn't too much pain in the employment of people or too many write-offs for banks.
Before today, we had already seen share prices of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) fall heavily. Investors are concerned there will be pain, even just with the net interest margin (NIM) falling. We'll see if their fear is right.
There have been very few times like this over the last century. They are once-in-a-generation opportunities for us to buy shares at much cheaper prices.
I have been buying shares during this period and I'm very likely to invest more today. There may be more pain ahead, but the falls will stop at some point, just like the GFC. The share price recovery could be quite fast.