There are decades where nothing happens; and there are weeks where decades happen. – Vladimir Lenin

If you feel like the last few weeks have lasted forever, you’re not alone. Here are my thoughts going forward.

The administration’s reaction to the virus was nonexistent until the market slapped them upside the head. They finally appear to be taking the coronavirus seriously. Everyone else must follow suit if they haven’t already.

Right now, I’m watching for two things.

First, is an increase in mass testing for the coronavirus. That means an abrupt end to social media posts about people being turned away from the ER or doctor’s office because they don’t meet the “requirements” for testing. This has been a horrendous failure of the administration so far.

South Korea has shown the impact mass testing has on slowing the spread of the virus. They set up drive-thru facilities with next day results by phone. They’ve tested over 270,000 people so far,  roughly 4,100 tests per million people (while the U.S. was at 26 tests per million people). Continue Reading…

What a week! The range of emotions felt over the last four days must stretch from kid in a candy store to panic attack. I’m guessing, for most people, the candy store sensation is absent.

But some of us feel it. And it’s just as hard for opportunity seekers not to act rashly as it is for panicky investors. That dopamine hit after every buy order clears can be just as addicting…until you’ve burned through the cash set aside for times like these.

Patience and discipline are just as important for opportunistic investors as it is for everyone else in extraordinarily volatile markets.

As the saying goes, the best time to buy stocks is when things seem bleakest. I don’t think we’ve reached that point yet (nor do I know where it is).

But some time, like five years from now, few will remember how they felt and reacted during this crash but everyone will agree it was a wonderful buying opportunity.

My suggestion: write it down! Continue Reading…

Out of all the 2020 market predictions, nobody suspected a virus. The future can be unpredictable like that.

But that’s why a plan is so important. Your investment plan may not have foreseen what would hit the markets, but it should have prepared you for a hit of some kind.

As we’re finding out, Mr. Market can get wild at times. While the S&P 500 is down 10.8% from its 2020 high, it’s only down 6.4% on the year. That brings it back to the same level it was at four months ago — November 2019.

If it feels worse, it’s because the fall happened so quickly. Seven trading days, and a 12.8% decline, separate the February 19th high from the February 28th low.

And it’s been highly volatile since. So far, March saw the S&P move: 4.6%, -2.8%, 4.2%, -3.4% over its first four consecutive trading days.

Of course, that only tells part of Mr. Market’s story. What about the stocks inside the S&P 500? Just because the S&P is down doesn’t mean every stock in the index is down (it’s a convenient example of the benefits of diversification in times like these). Which happens to be the case YTD: Continue Reading…

The year was 1688. The mood in England was optimistic. People were flush with cash and had few places to put it. The environment was ripe for a mania.

The East India Company was one of a handful of joint-stock companies trading at the time. Trading is a loose use of the term. Few people were willing to part with their East India shares since they were so lucrative and the company refused to issue more. The demand for shares needed to be supplied…

About 100 new joint-stock companies schemes would be born over the next four years — insurance, fisheries, tanning, swords, diving, and more. Stories would be woven about the future prosperity of each endeavor.

And like all bubbles, investors ate it up. What started as a need to earn a decent return, morphed into a get-rich-quick greed as the price action and large gains took hold. It would fuel the mania until something — supply for shares exceeded demand — caused the collapse.

If this sounds familiar, it should. It was repeated again in 1720. Twenty-eight years later the South Sea Bubble would birth (and wipe out) a similar list of companies. And that’s just the next market bubble, in a long list of bubbles that mirror it.

The bubble that began in 1688 was mostly forgotten until Lord Macaulay retold the tale almost 200 years after it popped (added paragraph spacing for easier reading): Continue Reading…