Mandatory Staycation

March 14, 2020

Life changed this week as Coronavirus panic set in around the country. The volatility index spiked above 77, the highest reading since the Lehman Brothers collapse in 2008. We also had the largest one day drop in the market since 1987. In order to put a bottom in the market, Congress must work together to create a package that supports employees and employers affected by work stoppages; time is of the essence. Also, look for the Federal Reserve this upcoming week to throw the kitchen sink at the market with a substantial rate cut and potentially a re-introduction of quantitative easing. 

You don't need me to tell you that life changed this week. It is times like this where is it important to take a step back and assess what is really important. Health, family, and friends are what matter the most in life. The stock market, it will come back one day. This is a time to focus on being healthy, spending time with family, and limiting public exposure as much as possible. This is all going to pass. A couple months from now, you will wish you were still working from home. As for my perspective on the market, 1,000 point up days are not bullish, they are opportunities to reduce risk. There are some areas of the market that are starting to look attractive, but the market as a whole still has many uncertainties when it comes to earnings in this new environment. You want to see the market re-test a bottom and then trade sideways for weeks to months before signaling the "all clear". We need fast action from Congress to backstop the employees and employers who will be affected by work stoppages. If we get the right action from Congress, and the Federal Reserve throws the kitchen sink at the market, that may signal a bottoming process is in place. There is action, then there is the right action; we need the right action. Stay safe, if you feel sick do not go out in public. Enjoy your staycation, by the start of summer you are going to wish you were back at home, and this will all be behind us.