March 26

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Your Recession Primer

These are scary and unknown times.  But it won’t last forever. -I don't know why the media isn't reporting this, but Israel says they are weeks away from a vaccine. -There is incredibly positive data coming from the drug hydroxychloroquine. -Remdesivir, in very small sample sizes, showed very quick improvement in sick patients. -Due to high levels of self-quarantine, Codogno, one of the two coronavirus clusters in Italy, has reported significantly fewer infections per day -China has also closed its last coronavirus hospital (there are not enough new cases to support them). -Test results for the virus are now coming back in hours, not days. -All of this is making us appreciate things we totally took for granted in the past. As far as the stock market goes: -The markets HATE uncertainty.  This is part of the reason for so much volatility. -The stock market projects what they think may happen to the economy.  It does not reflect the economy itself but what the traders fear could happen.  These fears are usually exaggerated which is why often times the markets will rebound as situations become more clear.  Markets usually overreact both negatively and positively. -The Aggregate Bond Index is positive for the year.  This represents thousands of bonds throughout the country.  This is common in a stock market downturn as people move money to very low interest bonds.  Most people older than 60, have bonds in their portfolio to balance out returns. -Gold is down for the year, which is interesting, as many Americans believe it is a “safe” instrument in times like these.  I’ve discussed in the past why gold is generally a poor investment. -”Staying the course” can be so difficult.  But selling low and buying high is the number one mistake investors make. -I hear many of you say, “Why don’t we invest in medical stocks since they will have so much demand?”  The markets saw this coming weeks ago.  It is almost impossible to stay in front of everyone else.  By the time you realize a stock might be a good buy, that ship has sailed. -I cannot emphasize enough the resiliency of the world economy.  While there may be a short-term downturn, this is not going to last forever.  Humans always find a way to bounce back. Every single time. Be Blessed, Dave P.S.- If you want to encourage your friends, please share.

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