And the Beat Goes On
And the Beat Goes On
Another week, another surprise. Barely a day goes by without a question from a client on how this stock market rally, which I have dubbed the Genesis Bull Market, can possibly sustain the gains given the level of economic turmoil.
It is critical to remember that the market does just fine with bad news. What it hates is uncertainty and although things appear uncertain, they really aren’t.
As an investor, do not get paralysis by analysis. During a crisis, the big money is made when things go from horrible to bad. If you make the big common mistake many investors do, and get sucked into saying ‘Let’s wait to see what happens” or “wait for things to get better”, you’ve missed the boat.
Do not worry about the negative headlines sick-in-the-gut feeling we are all experiencing during this crisis. Markets almost always rise with excessive pessimism and drop with optimism. Therefore, I love it when negativity prevails.
We had another bullish indicator this week. The American Association of Individual Investors (AAII) reported bullish sentiment fell a whopping 9.9% to 24.37% from 34.28% in the prior week. Bearish sentiment increased for the first time in six weeks to 47.78% from 38.05%. Those who are neutral on the market direction had a small increase to 27.85% from 27.67%. This implies that 75% of investors do not think stocks will rise. This is a true contrarian indicator so good news.
I’m not saying it’s smooth sailing, but the worst is over. We were hit by a natural disaster, not a supply or demand side economic recession. With the likelihood of a fast-tracked vaccine coming much sooner than expected, there now is a greater likelihood of a more aggressive economic reopening in 2021. This is what the stock market is celebrating.
The elephant in the room is the Federal Reserve of course. It is said that there has never been a problem money couldn’t fix. Well, when the guys who control the money tell you they are going to print as much of it as possible…you listen.
If you would like any financial planning or investment assistance, do not hesitate to contact me.
“Invest for need, not for greed!”