Financial Markets Functioning Well in a Pandemic




Bauguess, Scott W.

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NCAA officials did their part in addressing COVID-19 fears, but cancelling the 64-team tournament didn’t extinguish March Madness. It is alive and well in financial markets. Each day delivers upsets and unexpected developments, leaving commentators struggling to keep up with their recycled vocabularies.

Superficial headlines abound. Markets reel. Stocks plunge. S&P gives back gains. Trillions wiped out. Investors riled. It is hard to find information of substance. Like being on the scene of a tragic accident, onlookers can’t get beyond the surface images.

Perhaps the most intelligent thing I’ve read all week came, aptly, from the WSJ’s Intelligent Investor columnist Jason Zweig. He reminded his audience of enduring good advice from Warren Buffet’s mentor, Benjamin Graham. [1] Buy-and-hold investors shouldn’t be spooked by down markets. Sharp price declines provide an opportunity to buy wisely. And if you are trying to time the market (a.k.a., a speculator), be forewarned that in games of chance, casinos are the winners. All of this trading is great for market-makers on Wall Street.

It is likely that the news driving markets could get worse as the “what-if” tree grows. The economic and social consequences of the recently announced travel ban and unprepared healthcare system is the current focus. I worry most about a potential leadership crisis. Imagine an election year where candidates face significant mortality risk. The coronavirus has shown to play favorites among the aged, which includes three presidential candidates and septuagenarian leaders of Congress. And some of them have revealed they may already be infected with hubris … about the risks.

But prospects aren’t entirely bad. Financial markets have actually handled the pandemic remarkably well. As we head into a new week of market uncertainty, there are several reason to be optimistic about their continued resiliency.



We collect data from various sources to show the impact of COVID-19 and the related mitigation measures on the Top 20 Texas MSAs. The mission of this project is to gather information about large areas of economic activity in Texas, starting with Austin then expanding to the rest of the top 20 MSAs, in order to make policy recommendations about re-opening the economy with the effect of COVID-19 in mind. For more information please visit the website here, containing the Salem Center’s research, working papers, and other materials.

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