Answer to: Any explanation for the COVID-19 market surge?

Mass Death, Recovery, and Supply Chains If you check out the S&P 500, there's a big dip in early 2020, then a sustained climb until the beginning of 2022, and then a smaller, longer decline that takes about 18 months to recover from. That timeline lines up pretty well with Initial panic around the mass death of early COVID (early 2020) Recovery as everyone adjust to COVID and government stimulus (second half 2020, all of 2021) China and Russia cause massive supply chain disruptions (2022) Russia The Feb 2022 Russian invasion of Ukraine had a huge impact on global supply chains - Russia was a major supplier of oil and natural gas - especially to Europe, and Ukraine exports a massive amount of food - it was the #1 source of sunflower seeds (used for seed oil), #4 for barely exports, and #7 for wheat exports. Commodity wheat prices doubled in March 2022. And when Europe placed sanctions on Russia, energy prices spiked across the continent. Some European countries saw (temporary) energy price hikes of 75%. Post invasion energy prices in Europe spiked for nearly a full year, and the averaged out to be about a third higher than before the invasion. This impacted both European industrial production, and European consumer demand. China China has been the world's factory for many years now. China choose to pursue a zero-COVID policy that required repeated large scale lock downs to control the virus, in sharp contrast to the Western world where things rapidly returned to near normal after the vaccine was widely available. These lock downs closed factories, and also shut some of the largest ports in the world for weeks at a time - here's a CNN article from March 2022 about how costly that is. By November 2022, China was experiencing (very rare!) protests against zero-COVID. Supply Chains Global supply chains were already strained by the rapid shifts in 2020 -- remember when hand sanitizer was out of stock everywhere? Massive shortages in necessity items - food and fuel - combined with further disruptions when lock downs in China dragged on for far longer than needed only added to the pressure. The result was high inflation - which peaked in June 2022 at 9.1% and global economic pain. I find arguments that there was a "hangover" from the government stimulus to be unconvincing. There's a simple "supply and demand" story here where events in 2022 combined to make it harder to afford just about everything just about everywhere - and that's why the stock market doesn't look so great in 2022.