Instead of writing something new, I would simply urge everyone to go back and read what we wrote just 15 months ago in December of 2018 (see bottom of post). While the headwinds and tailwinds are different, many market internal figures remain in the same position they were on Christmas Eve 2018, before the market proceeded to rally 15% over the next 35 days. In my opinion, the future line in the sand will be back up around the March 3rd intermediate high (again it’s just an opinion).
The manifestation of the supply/demand shock always changes, but the fear and emotional instability never fails. I continue to expect a coordinated, fiscal and monetary policy response (government spending increases massively) to combat the current situation, and while Brad and I are firmly prepared to wipe egg off of our faces in the coming weeks and months, we just believe that the market is currently priced for armageddon, which leaves it open to a healthy (5-15%) short to intermediate-term rally.
I read something this week from a fellow financial advisor that really struck a chord. He said, “It’s a client’s job to tell you what their risk tolerance is. It’s an advisor’s job to figure out what their risk tolerance REALLY is.” Having more communication during these times helps us better do our jobs in the future, so while we’re doing our best to reach out to as many of you as possible, please don’t hesitate to call or email with ANY feelings, thoughts, or concerns you might have and we will talk through them.
Instead of trying to find a short-term bottom, we must let the market find it’s own level of equilibrium, snap back to some price level from its current extremes and then we can and will be in touch to see if your current risk tolerance levels are within your own emotional limits, which we understand are currently being tested.
Wash those hands! And this too shall pass, but given the breakage in several different pieces of the market (oil, bonds, etc.), the likelihood that this will be a months-long process, not a weeks-long process is high.
Thanks for the great information! Now that IKEA is reopening stores in China and less cases are being reported from other countries, do you think the worst is over globally? Also, do you think the media’s reporting of this virus, case by case by case, has affected how the investing public has reacted? Lastly, I realize younger people have 20-30 years to catch back up from this, but what are older people supposed to do who rely on their investment money to live on? Your thoughts???