With stock prices, even bond prices, falling faster than they rise the next day, fear is dominating many investors’ thinking about investing and many current life activities. Schools, restaurants, churches are closed, temporarily. Gatherings of even a few people are discouraged. Numerous US states are implementing business lockdowns and stay-at-home strategies to contain the spread of COVID-19. At current, there are no tools (vaccine, drug) to address this novel virus, other than shutting economic activity down to buy time for the doctors and drug scientists. Unclear is when we are going to open the economy back up (April? May?), or if we can make it through the year without shutting down again in the Fall. Closing the economy is adding to everyone’s fear of the unknown – a multi-dimensional fear not limited to just Coronavirus, and including the prospects of severe economic/financial damage. Put simply, most all news seems bad.
In pursuit of providing clients access to timely and relevant commentary to the current coronavirus market impact, below are links to research and analysis updates we are receiving. The aim is to share articles that add or enhance the understanding of the root worry (coronavirus and it’s impact on the global economy) and/or provide historical perspective on prior market corrections.
I am hopeful this will be a final Market Alert relative to the past few weeks of hysteria, fear, and market turmoil. The market spoke loudly yesterday (Thursday, March 12th) as it blasted on all areas of the financial markets – gold, bonds of greater risk orientation, and stocks around the world. We are hopeful recent action was the capitulation event for the market forming a bottom – it never feels like the bottom near the bottom. Time will tell. We do not know, we cannot model how Coronavirus will evolve and/or how it is minimized. We expect Washington will deal with the public erosion of confidence being expressed in the economic and financial markets both here and globally.
To start, one should read this following thought several times: “It never feels like a low near the low”.
Market Stress is absolutely no fun. After all these years (over 40), market drawdowns are terrible and bewildering; confounding one’s ability to comfort others when no one knows the future. We can review history (a lot of examples) to offer perspective, but providing certain future direction is not possible. We are all in it together.
Ironic – today, Monday March 9th is the 11th Anniversary of the March 2009 stock market lows, meaning this date was the start of the current bull market advance (we’re wishing it runs longer).
Generally, we are not fond of writing Market Alerts, as it often signifies market action that is unsettling to investors and clients. Further, no one knows exactly how to model a global pandemic. And, we usually don’t give a passing thought to the entity that China uses to describe its New Year, this year being called the “Year of the Rat.” Not to travel that path; yet most are well aware that rats carry all sorts of disease and illness if active pursuits of cleanliness and pest control are not followed. The global health environment appears to be actively searching for effective measures to curb the spread of Coronavirus. Additionally, Washington DC appears to be treating current events as mainly a health-policy issue.
Does any investor believe the last week of fast-moving negative market action was reasonable? Continuing our theme relating to seeing clearly with 2020 vision…. from our perspective, and many other research pieces we are receiving, indicates this past 7 days was “hysteria unmerited.” It is mind boggling how many traders (not investors) display a “shoot first and ask questions later” mentality. When one is unable to understand or is unable to quantify a concern, natural intuition reaction is “jump, and look later.”