HOW has the coronavirus stock market crash compared with earlier ones? Is there a pattern?
A year ago I looked at all previous US and UK meltdowns throughout history. Now we can include the 2020 crash too:
Each coloured line shows a crash and its one-year aftermath, in the S&P 500 index (solid lines) and FTSE All-Share (dashed).¹
The red lines show that last year stocks plummeted unusually far, particularly in the UK, where prices fell more than 30%. …
YOU’VE DECIDED you need a business plan — so where do you start?
My previous article explained why you should write a plan — and what’s wrong with all your excuses for not doing so. Here I give tips on how, and how not, to write one. But first of all, when to.
Business plans are often written too late. As a proper first draft takes weeks to research and write, people tend to procrastinate it — and do other things too soon instead.
In particular, don’t start the business or create a full product before writing a plan! Why…
90% of start-ups go bust, often due to poor planning. Founders know they should write a business plan, yet many never do — spouting lame excuses based on misconceptions and cognitive biases (see footnote*).
Or else, they throw together a sketchy, useless plan. Or an over-optimistic one they don’t believe. Or produce a plan way too late; ignore expert feedback; or don’t actually use the plan.
Even if the start-up survives, poor planning probably wasted lots of time, money, and opportunities.
WHAT MIGHT history tell us about how stocks will perform over the next year and beyond?
I previously wrote about the short-term aftermaths of crashes, which — despite wild variation — average out like a normal year. This is consistent with the Efficient Market Hypothesis, which says the fact prices have fallen should tell you nothing about which way they will continue afterwards.
But let’s see what happens longer-term. Here are how UK and US stocks performed for five years after every crash¹ in history:
WHEN STOCK MARKETS recently crashed, investors pondered whether to cut losses and sell, hold out in hope, or buy more shares while they’re cheap.
But could anyone tell which way prices would go? And three months on, what will happen to them next? Perhaps past meltdowns give a hint.
In theory, you can’t predict anything about prices. They react instantly to news—so before you can figure out which way they might go, they’ve already moved. Thousands of traders and computers beat you to it, so you’re always too late.
On the other hand, big crashes are so rare and extreme…
WHILE THE HUGE harms of coronavirus are well-known — death, illness, lockdowns, unemployment, recession, etc. — less attention has understandably been paid to the benefits.
Even clouds this dark have silver linings. Crises produce opportunities, innovation, and long-overdue reforms. 2020 will contain an extra year’s worth of mortality — but also a decade’s worth of progress, a leap into the future.
This article lists many benefits that could arise, so readers can consider how to make the most of them. They cover a wide range of consequences. For example, lockdown has made many people (even drug gangsters) reassess their lives…
CHRIS, A 75-YEAR-OLD caller to a BBC phone-in (just before lockdown became compulsory) said she’d rather risk death than give up her simple pleasures. So she had visited the beach, laid flowers on her mother’s grave, and met up with a friend.
Calling her “irresponsible”, the presenter asked: “So you’re happy to die for a day on the beach?”, and Chris replied, “Yes”. Cue social media outrage.
Though arguably Chris was irresponsible, by potentially harming others (about which more later), her decision to risk her own life raises important issues.
Discussion of the pandemic is mostly about saving lives. But…
CORONAVIRUS may cause many deaths and a global recession, depending on what governments do. Millions could die if the pandemic isn’t contained — but lock-downs risk financial collapse. This raises a major issue in economics, ethics, and politics: how can you compare lives with money?
(Short answer: by putting a very high dollar value on life, inferred from what people pay for safety. This lets governments consider health and safety alongside other aspects of policies. …
LIFE IN THE UK has got much better since the millennium, largely unnoticed. For despite financial & political chaos, austerity, terrorism, wars, and fears about Brexit and the environment, Britons have got happier and happier — probably happier than at any time in history.
How can this be?
THERE’S a well-known way to decide what to do, based on what’s urgent and important. It’s called the Eisenhower Box — and I think it’s flawed. Here’s why, and how to turn it into a new, better way to tackle tasks and plan your day.
(See the longer version of this article for more useful detail & examples.)
You have far too much on your to-do list, from clearing emails to running for President. Which things should you do, and when, and how?
The Eisenhower Box is a diagram to help you decide:
For any task, consider whether it’s urgent…