Episode 2: What Will Market Recovery Look Like?

Published: June 4, 2020 | Updated on: August 3, 2020

Thank you for joining me for Episode 2 of my NEW Money Wisdom Question Series, where I film answers to common financial and retirement investment questions in 2 minutes or less. Today we’re going to talk about some of the possible ways the market may recover from the pandemic.

Is our economy going to come back quickly? Is it going to take a long time? Some people are even asking, are we going into a depression? Obviously, we’re going into a recession, but maybe a depression, some say.

It’s very unnerving, right? If you have, 401(k)s, or you have retirement money and you don’t necessarily want to know what to do. And, keep in mind, the stock market is a leading indicator of what’s happening in the future, which is why a lot of people don’t understand why the stock market can be doing OK, when the economy seems like it’s having a hard time.

Three Different Types of Market Recoveries

  • U-Shaped Recovery
    • The economy goes into a downturn gradually and it comes back up out of that downturn gradually.

  • V-Shaped Recovery
    • The economy goes into a downturn very quickly and comes back up very quickly.

  • W-Shaped Recovery
    • The economy goes into a downturn, it starts bouncing back, and then it goes downwards again.

The question is, which one of these are we going to have after the pandemic? And you know what? It doesn’t matter, because you need to have a financial plan that does not depend on the stock market for your success.

Once again, we don’t know what the recovery is going to be like. My gut says it might take a while for us to get back to the way we were in early 2020, but I could be wrong. No economists really know, but we are probably
in for a rough ride and you need to make sure you’re doing everything you can to have a good retirement plan in place.

Thanks for joining me and I hope you found this information helpful!

P.S. If you enjoyed this topic and you want to hear more, you’ll love this podcast episode I recorded where I talk about the very same subject, in more detail.

P.P.S. Feel free to submit questions here for a chance to have them answered!