In the stock market you can profit if a company’s stock price declines. It’s known as a short position. If you had taken a short position in a large U.S. stock market index right before the pandemic hit our shores, you would have a positive gain today (April 6th, 2020), all because of the markets swift and speedy decline.
It sounds like a rather good idea, and shorting can work well within a small time period. You would never want to bet against the overall U.S. markets in the long run (for multiple years), and let me tell you why. Historically the S&P 500 which tracks large U.S. stocks has ended each year positively 76% of the time and negatively 24% of the time. Any economy that allows its citizens freedom to pursue their own individual economic interests is very difficult to contend against. Any time there is a capitalistic free-market, coupled with a democratic society, you unleash human ingenuity. Any time you control or dictate what people are allowed to invest in, or create barriers to creation, you stifle human ingenuity. Humans when allowed to explore, grow, fail, and create, can do, and have already done remarkable things. Look at our historical track record. Consider a few recent innovations i.e., automobiles, jet airplanes, the internet, air conditioning, television, refrigeration, satellites, space exploration, and the list can go on and on indefinitely. Do you think that innovation and breakthroughs in various fields will stop, or even slow down? I don’t. I see an acceleration of all of these things as the world becomes smaller and smaller and as information is shared between us.
Remember that in the past our markets and economies survived not one, but two world wars, the Spanish Flu pandemic, the Great Depression, the Korean War, Vietnam War, the Cuban Missile Crisis (where we were days away from a nuclear War), Black Monday in 1987, the Dot-Com crash, 9-11, the housing bubble, and the Great Recession.
We have been through some dark days in humanity’s history. We have seen worse days than what our world is experiencing in our current pandemic. We will come out of this more resilient, and also more compassionate. Humanity, despite what we read in the news is improving. Sometimes that progress happens so slowly that it is difficult to observe and identify, but it is happening nonetheless. Yes, there are periods of regression, but they never last. The truth always prevails.
In the end, human ingenuity has always outsmarted mankind’s smartest skeptics and naysayers. Nothing can be fathomed without it first being imagined. It takes imagination and hope to create. We are living in a world of endless possibilities, and now more than ever, endless opportunities are before us. Never short humanity, you will lose every time.