We continue our special series with the second of our “Five Biggest Private Capital Surprises of 2020:”

Surprise #2: Non-Correlated Trends – Infections, Markets, and the Economy

The Global Biological Crisis of 2020 was different from the Global Financial Crisis of 2008 in several ways. Of course, one started with a virus, the other with home mortgages. Also, commercial activity wasn’t shut down as quickly twelve years ago, nor was its recovery as swift. Finally, there wasn’t the sharp “have/have-not” distinction among industries as there has been today.

But at moments in both crises when financial markets felt the brunt of investor pessimism, asset prices reacted similarly. Across public equities and credit, for example, valuations swooned in synch as investors found no safe havens amid the cataclysms. Bad news sunk everything. In that respect, to paraphrase Tolstoy, happy markets were happy in different ways; unhappy markets were alike.