March 16, 2020
Markets continue to be under pressure. Unknowns remain about the magnitude and duration of the coronavirus, including the extent of the human tragedy, as well as the economic impact.

Uncertainty breeds volatility. In just a few weeks, the market has gone from a record high to a decline of 29% for the S&P 500. This is the fastest market decline from a record high in modern history. The average daily price swing for the market has been over 5% for the past 10-days. This is the highest volatility seen since the fourth quarter of 2008, during the depth of the Great Recession, and before that, the 1987 crash.

With both volatility and fear high, we thought it would be instructive to look back at the fall of 2008. On October 16, 2008, during the height of market turmoil, Warren Buffett penned an Op-Ed for the New York Times titled: “Buy American. I Am.”

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So … I’ve been buying American stocks…

…Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

Buffett, Warren.E. (2008, October 16). Buy American. I Am. New York Times. Retrieved from

Although he was not making a short-term market call, from the time he penned that letter, until roughly a month later, November 20, the S&P 500 dropped another 21%.  Markets would fall a total of 29% from the time of the Op-Ed to the final market low on March 9, 2009, roughly five months later.

The market drop was painful. Fear remained high. Despite the continued market drop and investor fear, once stocks found their final low, they skyrocketed by 65% by the end of 2009. Moreover, one year later from the time of Buffett’s Op-Ed, stocks were UP 15%. That is, even with a sharp temporary overshoot to the downside, a year later, investors who maintained current positions or added to equities at the time of the Op-Ed gained double-digits. Stocks continued to rise over the coming years, culminating in the second strongest bull market in history, with a price gain of about 400%.

Of course, there are many differences from today and 2008. However, a key question remains for investors: are earnings for companies going to be permanently impaired from the current crisis? We are certainly going to see a sharp hit to profits this year. And while we’re not certain on timing, we believe it is more likely that once we get to the other side of this downturn, the S&P 500’s earnings will also rebound sharply.

Bottom Line

The short-term outlook remains highly uncertain. We know markets are already pricing in an average recession at current levels. We know markets are extremely stretched to the downside. We know that markets can overshoot further based on fear and forced selling.

That said, we will get through this. And we believe that once the market has a better handle on the full depths of the coronavirus, we are likely to see a snapback rally that is just as powerful as the decline that we have seen. We do not know when that starts or from what level. Our conviction is that longer-term investors, who have the time horizon and can stomach the downside potential, will be rewarded for holding equities during this challenging time.


This material was provided by SunTrust Private Wealth Management for use by BB&T Wealth.

Advisory managed account programs entail risks, including possible loss of principal and may not be suitable for all investors. Please speak to your advisor to request a firm brochure which includes program details, including risks, fees and expenses.

SunTrust Private Wealth Management is a marketing name used by Truist Financial Corporation and the following affiliates: Banking products and services, including loans and deposit accounts, are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank and SunTrust Delaware Trust Company. Securities, brokerage accounts and /or insurance (including annuities) are offered by SunTrust Investment Services, Inc., BB&T Securities, LLC, and P.J. Robb Variable Corp., which are SEC registered broker-dealers, members FINRA, SIPC, and a licensed insurance agency where applicable. Investment advisory services are offered by SunTrust Advisory Services, Inc., GFO Advisory Services, LLC, BB&T Securities, LLC, Sterling Capital Management, LLC, Precept Advisory Group, LLC, and BB&T Institutional Investment Advisors, Inc., each SEC registered investment advisers.  BB&T Sterling Advisors, BB&T Investments and BB&T Scott & Stringfellow are divisions of BB&T Securities, LLC. Mutual fund products are advised by Sterling Capital Management, LLC.

While this information is believed to be accurate, SunTrust Banks, Inc., now Truist Financial Corporation, including its affiliates, does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these analyses or market data.

The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Truist Financial Corporation makes no representation or guarantee as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. The information contained herein does not purport to be a complete analysis of any security, company, or industry involved.  This material is not to be construed as an offer to sell or a solicitation of an offer to buy any security.

Opinions and information expressed herein are subject to change without notice. STIS and/or its affiliates, including your Advisor, may have issued materials that are inconsistent with or may reach different conclusions than those represented in this commentary, and all opinions and information are believed to be reflective of judgments and opinions as of the date that material was originally published.  STIS is under no obligation to ensure that other materials are brought to the attention of any recipient of this commentary. 

Truist personnel are not permitted to give legal or tax advice.

Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance.

STIS/STAS shall accept no liability for any loss arising from the use of this material, nor shall STIS/STAS treat any recipient of this material as a customer or client simply by virtue of the receipt of this material.

The information herein is for persons residing in the United States of America only and is not intended for any person in any other jurisdiction.

Investors may be prohibited in certain states from purchasing some over-the-counter securities mentioned herein.

The information contained in this material is produced and copyrighted by Truist Financial Corporation and any unauthorized use, duplication, redistribution or disclosure is prohibited by law.  

STIS/STAS’s officers, employees, agents and/or affiliates may have positions in securities, options, rights, or warrants mentioned or discussed in this material.

Asset classes are represented by the following indexes. An investment cannot be made directly into an index.

S&P 500 Index is comprised of 500 widely-held securities considered to be representative of the stock market in general.

©2020 Truist Financial Corporation. BB&T, SunTrust®, the SunTrust logo, and Truist are service marks of Truist Financial Corporation. All rights reserved