COVID × August 2015: the same diagnosis, opposite anatomies

Comparison

What rhymes

August 2015 and March 2020 are the two biggest shocks of the recent archive. In both, domestic risk appetite touched the floor of the scale and the investor's mood sank to extreme pessimism. The Radar's diagnosis was nearly identical: declared aversion, fear priced in.

What differs

The origin and the outcome were opposite. 2015 was born from within — fiscal crisis, debt and the exchange rate breaking edges at the same time —, with the Selic pinned at 14.25% and a slow exit: the August bottom was not the bottom, and the structure only normalized a year later. 2020 came from outside — a pandemic shock —, with the Selic on its way to the low (2.0%) and capital retracing the path in three months. One was a marathon; the other, an acute shock.

What didn't happen

Neither was a clean V. In 2015, anyone who bought the August bottom saw November get worse. In 2020, anyone reading the appetite recovery as "everything normalized" saw mood take eight months and the exchange rate never come back. Panics that looked alike on the surface resolved in ways that bore little resemblance.

Honest verdict

The same diagnosis does not imply the same prognosis. Extreme aversion tells you where we are; it does not tell you, on its own, how long it will take to get out — nor by which path.

Continue the story: The three alarms of August 2015 · What happened after fear priced everything · What the Perene Risk Index is →

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Characters: Flow (risk appetite) · Mood · Dollar · Rates (Selic)