In approximately one month of trading, the US Stock Market has returned to it’s value before Donald Trump’s presidency began. 3 years and approximately 2 months of growth has been erased due to a ‘Black Swan’ event that now dominates every headline and talk radio show on right now. Very concerning of course aside from the illness itself is the unknown of how long these impacts will have on our lives.
Most, if not all of us have been already impacted fairly significantly due to this virus. My daughter’s school went to online classes for the foreseeable future. She is in 1st grade, so needless to say, the school and parents were not prepared for this. My significant other is a personal trainer at a gym, and we found out Monday that her services have been suspended until further notice. Each day, thousands learn their jobs have been put on hold while we figure out how to deal with COVID-19. Parents have to stay home with their kids taking online classes, which partially explains the run on milk at the Walmart by my house. What started as a story on page 9 a few weeks ago, this virus has quickly become a factor in everything we do.
The FED is doing all they can; the problem is there isn’t much they can do. They’ve lowered interest rates as far as they can. They are going to be helping buy stressed assets in the corporate bond world. They’ve signaled the need to help airlines, travel, small business etc. Also noteworthy, they’ve announced intentions to start sending money directly to consumers so those unexpectedly impacted by the Coronavirus can pay their bills and buy their necessities while the Government decides what to do next.
These intentions haven’t calmed the market down though. The volatility of this market shows how scared people are of holding the investments they hold. The more bad news that comes out, the more likely investors are willing to lock in the cash and run. These moves by the FED have tempered off possible large corrections in the past, but with the global economy shut down and commerce all but stopped, their tools may not be enough. The worst part (financially) is how expensive all this will be. Who do we bail out? Who don’t we bail out? How much money do we give away to consumers? Etc But most importantly, “Where are we going to get it?’
If you are having similar concerns about how this market can impact your situation, please feel free to give me a call.
Phillip Connors Investment Adviser (303) 770-3030
Seeking Value 