Article by Sam Sweitzer
To think in narratives is human. We like understanding the world through stories. In times such as these, my job as a portfolio manager is to help clients make sense of the disparate and widely diverging pieces of information. We need to know the plot of this story, when it ends, and how it ends.
The current COVID-19 sell-off and situation are like nothing we’ve ever seen. The largest countries are only starting to respond with severe mobility restrictions, which will last for at least several weeks, and potentially several months. The dual shocks of coronavirus and an oil price war will almost certainly push the global economy into recession. A significant drop in economic activity seems almost certain as people stay home, and the bustle of life slows considerably.
Yesterday (Tuesday), we saw the 3rd most substantial decline in US markets on record. This decline followed last week’s drop, where all the major US stock markets reach 20%+ declines from their recent peaks. In previous bear markets, this process took more than four months. This time, it took just three weeks. If previous bear markets tell us anything, it is that bone-jarring volatility—both up and down—is likely to continue.
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Periodically, we combine the latest information about the economy as well as updates from our office at Anson Analytics.