How Does Something So Right Feel So Wrong?

How Does Something So Right Feel So Wrong?

The stock market has been in recovery mode, signaling a quick recovery from the worst crises this planet has seen since Noah took his cruise. However, this is leaving investors asking the question … how can this be?  Won’t the economic impact be devastating for months to come?

The answer is yes. So?

One of the most important lessons to learn about financial markets is an old adage: “If it’s obvious, it’s obviously wrong”.

Well, the obvious trade has been to sell this market because things “feel” so bad.  

Remember, the market does fine with bad news. What is doesn’t do well with is uncertainty.

I know, I know, you can argue until the cows come home about how corporate earnings will not be there for months or years to justify current stocks prices, along with a zillion other reasons why stocks should not be rising. Yet, the environment we live in still feels so bad still what feels bad?. However, the market is clearly aware of all the negatives and giving it a pass while focusing on life after Covid.

It’s common nature to think the worst during a crises and worry that there is more to come. However, since the worst of it, we have received better than expected news on every front: The government and the Fed acted quickly to save the economy, the death toll has been much lower than expected, and a vaccine is reportedly easy to create. Best of all, as the world begins to reopen, we have not been overwhelmed by a devastating 2nd wave of the virus.

It may not feel good, but it is the reality. Money is not made in stocks when things recover and look good. It is made when things go from horrible to bad.

One last thing…for those who do not think things will get back to normal for eons, let us be reminded of the 2009 H1N1 pandemic. (Yes it was officially labeled a pandemic).

According to the CDC, there were 60.8 million cases, over 274,304 hospitalizations and 12,469 deaths in the U.S. alone. They estimate that worldwide there were as many as 575,400 deaths.

How long did it take consumers to get their old buying habits back?

Although I am very positive for the country and the continuation of the this Genesis Bull Market, I remain somewhat cautious. Optimism has been steadily increasing which is not good for a rally. Market’s rise most when climbing a wall of worry. Therefore, I would not be surprised by a small pullback here. Corrections always need a catalyst and rising tensions with China just might provide it.  

 “Invest for need, not for greed!”

Cheers -Keith

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Smart Money Newsletter

Written By: Keith Springer

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