If you're wondering why the stock market has made up most of its 2020 losses even though the pandemic hasn't ended, you're not alone
CTVNews.ca asked Pattie Lovett-Reid, CTV News' Chief Financial Commentator, to weigh in on these topics and others that might matter to amateur investors struggling to understand the connection between the pandemic and the market.Why did the stock market sink so much at the beginning of the pandemic?There was just a complete fear of the unknown. In the past, we've had economic slowdowns – but we've never had a full halt where people couldn't do anything.
Someone who is attempting to time the market is someone who is looking to benefit now from economies reopening, people working from home. Think about the stay-home economy. Look at tech stocks that defy odds – they have hit record highs, they have strong cash on their books. If you think about it, we've had a strong reliance on technology – so some of the winners, early still in this pandemic, clearly make sense if you're an investor.
You think about the energy sector, when oil literally cratered and we're seeing some bounceback – it still hovers around $40. But our concentration on the TSX, it really continues to be financials as well as energy, and those are two of the hardest-hit areas. I get a lot of questions from seniors who say 'Should I be moving entirely into cash?' And my response to them is no, not necessarily. What I think you should look at is 'Do you have enough money to cover off your living expenses?' You may be in your 60s, but you could still have a long time horizon, so you could want to have exposure to the markets to keep up with taxes and inflation.
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