Judging the Functioning of Equity Markets in 2020

Forthcoming, Bankers, Markets and Investors

16 Pages Posted: 20 Jan 2021 Last revised: 26 Apr 2021

See all articles by Mikael Petitjean

Mikael Petitjean

Catholic University of Lille - IÉSEG School of Management, Lille Campus; Lille Economie & Management (LEM) UMR 9221; Louvain School of Management (UCL); Catholic University of Louvain (UCL) - Louvain Finance (LFIN)

Date Written: January 5, 2021


This paper is a concise review of the equity markets' reaction to the COVIDcrisis in 2020. Relative to other global institutions, equity markets performed remarkably well in 2020 and investors ought not to be ashamed of their reactions relative to consumers. It would be a terrible abuse of language to characterize 2020 as being financially irrational. The COVIDcrisis in 2020 was one of the most orderly crises ever. The damage and the reward across companies, sectors, and countries made a lot of sense. Although there are pockets of extremely high valuations in the tech sector, humility has always been a virtue when it came to valuing tech firms. While stocks are very expensive in absolute terms especially in the US, they are not relative to governmental bonds. But there is a big caveat to all this: the rise in the monetary supply since 2010 has been so incredible that markets have dived deep in unchartered waters. Central banks must find our way back to homeland.

Keywords: Equity markets, COVID, crisis, irrationality, market review, CAPE, ECAPEY, BEYR, bond, Tesla, liquidity, money supply, central banks, beauty context, system 1, system 2, small, mid, large, Nasdaq, tech, sector indices, valuation

JEL Classification: G10, G11

Suggested Citation

Petitjean, Mikael, Judging the Functioning of Equity Markets in 2020 (January 5, 2021). Forthcoming, Bankers, Markets and Investors, Available at SSRN: https://ssrn.com/abstract=3769018 or http://dx.doi.org/10.2139/ssrn.3769018

Mikael Petitjean (Contact Author)

Catholic University of Lille - IÉSEG School of Management, Lille Campus ( email )

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Lille Economie & Management (LEM) UMR 9221 ( email )


Louvain School of Management (UCL) ( email )


Catholic University of Louvain (UCL) - Louvain Finance (LFIN) ( email )

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Louvain-la-Neuve, 1348

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