A recent stock market rally despite the novel coronavirus outbreak left some market watchers worried about an overpriced market detached from a reeling economy with over 26 million newly unemployed.

But the resilient market should be a source of optimism, rather than concern, said Mellody Hobson, the co-CEO of multibillion-dollar firm Ariel Investments. Buoyant stocks show that traders expect the economy to rebound from the downturn, she said, making the outbreak a buying opportunity for patient investors who come in after the early selloff.

“In some ways, what the market is telling us, it's telegraphing a recovery,” she adds in an interview with Yahoo Finance on Thursday. “It's telegraphing the fact that this will end — it will not go on forever, even though it feels like it will.”

“That doesn't mean there won't be more pain and anguish, and certainly a lot of people are suffering right now,” she says. “But the market in its own way is forecasting.”

After reaching a low on March 23, the S&P 500 added 637 points or 28.5% by the close last Friday, April 17, recovering more than half of its drop from the record high of mid-February. As of Friday morning, the index had fallen a modest 2.3% this week, retaining most of the prior gains.

“For the people [who] are really willing to take a long term view, it creates a buying opportunity,” Hobson says.

“Where you can buy companies that are out of favor, that have been thrown away, but where you can see a better future down the road,” she adds. “That's what we're talking about not letting that opportunity go to waste.”

Hobson acknowledged the severe economic damage wrought by the coronavirus, saying the current downturn is “much more challenging” than the global financial crisis and “better days” may not arrive until 2021.

But she said the immediate aftermath of the crisis brought a sell-off driven by emotion rather than a clear-eyed economic outlook.

“Certainly what we've seen in the last few weeks have been some moments of panic,” she says. “We saw some indiscriminate selling in the stock market, especially in the early days.”

Since last year, Hobson has served as the co-CEO of Ariel Investments, a firm with assets totaling $12.9 billion, where she worked for nearly the past three decades. She is also the firm’s president, a position she has held since 2000. Her Ted Talk on challenging racial inequality, given in 2014, has been viewed more than 3.7 million times.

While optimistic, Hobson urged caution for traders who choose to enter the market during the crisis.

“That doesn't mean rushing in and diving in headfirst,” she says. “It means being very thoughtful, very patient.”

“You don't go in headfirst right now,” she adds.

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