March 27, 2020

On Tuesday, March 24, U.S. equities had their best day since 1933. That +11% day was followed by the 9% advance of Wednesday-Thursday, so we’re talking a healthy, three- day 20% rally off the bottom. Unfortunately, given the disappointing New York City data,we’re not out of the COVID-19 woods yet, but how about the stock market woods?Frankly, given the severity of the current selloff, we’d call it a 50/50 ball (as they say in soccer), but some historical data suggest that the selloff’s end may be near.

Research is a big part of what we do, and lately, we’ve been spending a fair amount ofquality research time with the 2008-2009 archives. In that earlier period, of course, all the large company stock market indexes declined sharply in 2008, and then, as our jawsdropped, kept right on going. In fact, during the bear market’s last nine weeks, i.e., fromJanuary 1, 2009, until March 6, the large company Value indexes had a last gasp declineof 30% or so. That era’s 10-stock Yield Group, the backbone of our portfolios, declined about 33% during the same period (the more growth-oriented Momentum Group held up much better). Then, the work of the Grand Troika, i.e., Ben Bernanke, Tim Geithner, and Hank Paulson, and many others kicked in, and the S&P 500’s 666.79 of March 6, 2009, became the 3386.15 of February 19, 2020, which capped an exceptional 11-year run.

Continue reading “A Tale of Two Marches” →

March 19, 2020

The above title may be a bit melodramatic because we all are on the front line of this one, but what we really have in mind is the investment front line, i.e., watching that computer screen all day and listening to the accompanying chatter. In no particular order, here are a few tidbits:

The Far East

This is where COVID-19 began, of course, and there is a natural tendency to look at the Far East for indications of how it might play out. One very encouraging sign: The Asian stock markets, so far and on most days, have been holding up better than Europe and the U.S. Not a lot of data points, to be sure, but others and we have noted the pattern. If the virus itself moved from west to east, maybe the human and economic recovery will as well. Another encouraging sign: This morning, the Hormel CEO told CNBC that he had talked to his (China) team and that they are pretty much back to normal. Yet another: Starbucks has re-opened in Wuhan, COVID-19’s Ground Zero.

Continue reading “Notes from the Front Line” →

March 13, 2020

Geesh! Call it what you like: big-time hiccup, correction, bear market, whatever. We have seen several of these things over long careers, and “these things” never are fun. Anyone, male or female, young or old, beginner or professional investor, who dismisses it all with a wave of the hand, is kidding himself/herself and you. Still, you know and we know that staying the course with a well-conceived investment plan, even in (particularly in) the time of COVID-19, is essential if one is to deal effectively with the 1974s and the 2008s and the 2020s. The alternative, i.e., having an asset allocation strategy that responds to the 6 A.M. S&P futures or the pain of market volatility or the latest COVID-19 data is a prescription for mediocrity at the very least and, at worst, (dare we say it?) disaster. All of these years watching markets go up and down tell us that this is so.

Let’s see where we currently are and where we should go.

Continue reading “U.S. Equities in the Time of Covid-19 : Where Are We?” →