Stock Performance When Facing the Unexpected
The COVID-19 crisis has had enormous costs. The effects on financial markets were exacerbated by panic, fear of the unknown, fear of the end of the world as we knew it. This panic obfuscated our ability to make rational predictions on future cash flows and asset values. Overall though, our economic system is bouncing back. We can learn from this experience and build more flexible models which can help us to better manage severe systemic risks.