In the early days of the Covid-19 lockdowns, many held out\nhope that the temporary pause to economic activity would give way to a robust\nrecovery in the second half of the year. It was common to hear talk of a\n\u201cv-shaped\u201d recovery. <\/p>\n\n\n\n
As the weeks drag on and negative economic data continues to\nflood the airwaves, however, expectations for a swift and strong recovery\ncontinue to march lower. The \u201cV-shaped recovery\u201d turned into a \u201cU-shaped\nrecovery,\u201d which in turn has now become a \u201cswoosh-shaped\u201d recovery resembling\nthe Nike logo. The implication of a \u201cswoosh-shaped\u201d recovery is a long, slow,\nfairly uninspiring return to pre-pandemic economic growth. In all, I\u2019ve been\nnoticing over the weeks that expectations for the economic recovery continue to\nfall. <\/p>\n\n\n\n
And I think that\u2019s a good thing, here\u2019s why:<\/p>\n\n\n\n
I am certainly not rooting for a slower recovery \u2013 just the\nopposite in fact. But throughout my career, I have consistently held that\nequity markets care far less about economic outcomes in vacuums and far more\nabout whether those outcomes<\/em> exceeded expectations. <\/em>With investing,\nit almost always boils down to expectations versus reality. If expectations are\nlow and falling \u2013 which I think they are now \u2013 it is much easier for the\neconomy to surprise to the upside, producing a favorable outcome for stocks.<\/p>\n\n\n\n ____________________________________________________________________________<\/p>\n\n\n\n Stocks Rarely Wait for Good News, and Neither Should You! <\/a><\/strong><\/p>\n\n\n\n Taking your cues from the economic headlines of the day can\nbe a costly mistake. There is\nno way to know exactly when or how the economy will recover, but it is\nimportant not to put your investments on hold until it does. Instead of making\ndecisions based on fear and emotions, I recommend focusing on the long-term and\nmaking decisions based on data and fundamentals. To help you do this, I am\noffering all readers our just-released Stock Market Outlook report. This report\ncontains some of our key forecasts to consider such as:<\/p>\n\n\n\n