Last week was quite a week, in the equity markets. It did end on an upbeat, especially during President Trumps new conference. As a point of reference, on February 19th of this year, the S&P 500 closed at an all-time high of 3,386.15. At the end of trading on March 12th, it closed at 2.480.64 into bear market territory. Since the end of WWII, this is by far the fastest the market has ever gone from an all-time high into a bear market territory. If you count, that’s 22 days or, if you prefer, 16 trading days.

As we all know by now, the precipitants of this decline have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. (That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.)

Another point of reference we all should consider is, that in June 1981, the HIV/Aids crisis came upon us. Since that time, we have had 11 more crises/panics and we are now in the middle of the 13th. And, since that time the S&P 500 has gone from the low 200s to, as of last Friday, to over 2700. That is not including the dividends from the underlying equities.

The common denominator of a b & c above is the uncertainty of it all. As I was watching both the news conference and the market’s reaction, I wasn’t around at the time, but I was thinking that it sounded like the Manhattan Project to build an autonomic bomb or the Marshall plan to resuscitate Europe after WWII. As has happened time and time again, the resources of our free market working together with federal, state and local governments and unshackled by restrictive regulations will solve this problem.

It is hard for me to believe that the US business world – and the cash flows it will produce in the future – are worth 20+% less today than they were on February 19th. So, we shall see how March ends in the coming few weeks. As always, should you have any questions or wish to talk please call or email me so we can schedule a time together. BTW, the attached article is a good read, especially when you get to the end.

Doug Alden

Link to article…

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