Why did shares rocket during lockdown?

Hoenir

booneruk said:

ShinyStarlight1 said:

S&P 500 ETF:
01 Apr 2020 - 31 Mar 2021   +55.90%

This is probably the effect of the Magnificent seven stocks that I mentioned booming throughout that time period. Apple, Microsoft, Google, Meta, Tesla erm the other ones I forget now

Tesla didn't join the SP500 until November 2021. Share price peak at that time as well. Since has experienced a sizable decline. Sums how much some supposed market commentators actually know about what they are writing about. 

ShinyStarlight1

booneruk said:

ShinyStarlight1 said:

S&P 500 ETF:
01 Apr 2020 - 31 Mar 2021   +55.90%

This is probably the effect of the Magnificent seven stocks that I mentioned booming throughout that time period. Apple, Microsoft, Google, Meta, Tesla erm the other ones I forget now

But so much in so short a time! I’m trying to understand why that was.

ColdIron

ShinyStarlight1 said:

S&P 500 ETF:
01 Apr 2020 - 31 Mar 2021   +55.90%

You are being very selective with your dates by choosing pretty much the nadir after the crash. If you had started just 6 weeks earlier you are looking at a much more modest 12%

ShinyStarlight1

ColdIron said:

ShinyStarlight1 said:

S&P 500 ETF:
01 Apr 2020 - 31 Mar 2021   +55.90%

You are being very selective with your dates by choosing pretty much the nadir after the crash. If you had started just 6 weeks earlier you are looking at a much more modest 12%

But 6 weeks earlier the world hadn’t gone into lockdown. That’s the bit that mystifies me: why shares flourished when the world became virtually still. 

TweetnDave

As lockdown approached it seemed apocalyptical. Then a couple of months later it appeared managable. In November IIRC the first successful, tested vaccine appeared as the light at then end of the trouble. 

 Prices reflected these feelings. 

Aretnap

ShinyStarlight1 said:

ColdIron said:

ShinyStarlight1 said:

S&P 500 ETF:
01 Apr 2020 - 31 Mar 2021   +55.90%

You are being very selective with your dates by choosing pretty much the nadir after the crash. If you had started just 6 weeks earlier you are looking at a much more modest 12%

But 6 weeks earlier the world hadn’t gone into lockdown. That’s the bit that mystifies me: why shares flourished when the world became virtually still. 

They didn't flourish particularly. 12% growth over 4 years is nothing to write home about by historical standards. Equities markets crashed when people thought that the world was about to end, bounced back when they realised that it wasn't going to end, and then went back to slow, steady but fairly unspectacular growth over the medium term.. 

mark_cycling00

For a while (after first lockdown) it appeared that workers had become more productive being at home, business costs may reduce through less office space needed and that consumers were prepared to pay for services to be delivered through low cost channels such as zoom, home delivery etc.
All this was priced into many stock prices 

EthicsGradient

The companies that did particularly well in lockdown were technology companies that were already dominating the stock market indexes. Those in the hospitality industry did not.

Exodi

Government stimulus/quantitative easing gives cash to the general public, while also discouraging them from going to work.

Cash + Time = (Online) Shopping

I work as a Sales Director for a manufacturer that sells consumer goods, mostly online - and despite what we predicted (and budgeted for) our sales went absolutely through the roof with Covid being our best financial year on record by over 10%. A lot of our distributors reported the same thing.

Alternatively, there was incredible public attention on trading at the time (presumably as people were fearful about their long-term job prospects at the start of a pandemic, and began to think about other ways to make money), and social media grabbed onto this with both hands. This was both positive and negative - positive because it got more people into investing, negative because some of it was extremely risky investing where not enough lessons were learned because everything happened to be going up at the time.

Cus said:

Sg28 said:

World governments were throwing free money at everyone like there was no tomorrow. 

Who got this money? I didn't get anything 

I'm sure you're being disingenuous but obviously the furlough scheme in the UK. While many people didn't get it, many people did.

I was not furloughed (though we furloughed our production staff where it was physically impossible to perform their duties at home) and I remember on my jogs seeing the parks & beaches absolutely swarming with people (which is ironic given the purpose of the furlough scheme was to pay people to stay at home as it was decided it wasn't safe for them to be near people at work... but I digress).

11.7m people were furloughed through the scheme which is about a third of all workers.

sevenhills

TweetnDave said:

As lockdown approached it seemed apocalyptical. Then a couple of months later it appeared managable. In November IIRC the first successful, tested vaccine appeared as the light at then end of the trouble. 

 Prices reflected these feelings. 

I like to buy after there has been bad news about a stock, shareholders go into panic mode. The trick is to know when the panic is over, not easy. There then follows a steep recovery.