In a newly released interview, SkyBridge Founder and former White House Communications Director Anthony Scaramucci says the last recession provides a key lesson for how to weather the current upheaval in the markets as businesses remain shuttered to contain the pandemic.
“The 2008 crisis seemed to be a dress rehearsal for the 2020 pandemic,” Scaramucci said in a newly released interview with Yahoo Finance’s editor-in-chief, Andy Serwer, taped on April 2. “I'm not going to be able to time the market. Sure, could it drop another 5% or 10%? Absolutely.”
The daily volatility on the S&P 500 exceeds even anything seen during the last part of the Great Depression, according to a note released by Bespoke Investment Group, which MarketWatch reported on this week. But a sudden, dramatic dip in the market shouldn’t scare off investors, Scaramucci said.
“You have to think long term, particularly in a stock market you own that business. You're taking the ride over a market cycle,” Scaramucci says. “Don't get juked out of your stocks right here. It's never been a good idea to sell in a panic.”
The sentiment echoes advice given by Berkshire Hathaway CEO Warren Buffett during the Great Recession, writing in a New York Times op-ed that the downturn offered an opportunity for investors to jump into the market at a low point. “Be fearful when others are greedy, and be greedy when others are fearful,” Buffett wrote in the op-ed, which Scaramucci cited in his interview with Yahoo Finance.
Scaramucci made the remarks during a conversation that aired in an episode of Yahoo Finance’s “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
‘They wish they had hit with harder tools’
In the aftermath of the the 2008 financial crisis, the economy underwent a U-shaped recovery, taking many months to bounce back. Economists are split as to whether the coronavirus recession will mimic that of 2008, or resemble more of a V-shape, with worse effects in the near term but an ultimately faster recovery.
Scaramucci indicated that there are lessons to be learned not only by investors but leaders in charge of fiscal and monetary policy, citing “Firefighting: The Financial Crisis and Its Lessons,” in which former Federal Reserve Chair Ben Bernanke and former U.S. Treasury Secretaries Tim Geithner and Hank Paulson discuss the lessons they learned during the 2008 financial crisis.
“One of the things they said in that book that they wished they had done was gone faster,” Scaramucci says. “And they wish they had hit it with harder tools or larger macroeconomic tools. And I know that Secretary Paulson is in close touch with [current Treasury Secretary] Steven Mnuchin.”
Scaramucci, who has spent over 31 years on Wall Street, served as President Donald Trump’s communications director three years ago but was fired after just 10 days. In 2005, Scaramucci founded Manhattan-based investment firm Skybridge Capital, where he currently works as a managing partner.
As of Friday morning, the number of confirmed coronavirus cases in the U.S. rose to more than 466,000, as the worldwide total surpassed 1.6 million, according to Johns Hopkins University. The number of people with the disease in the U.S. has grown dramatically since March 1, when there were roughly 100 confirmed cases.
The coronavirus outbreak should cause political and economic elites to revisit assumptions about how the society can function most effectively, Scaramucci said.
“Maybe this pandemic will be a wake-up call for policymakers, politicians, macro-economists, the very wealthy, the Forbes 400, where they'll examine what's going on in society and say, OK, we can do this better. We can make it better,” says Scaramucci.
Michael Claudio is a producer for Yahoo Finance.