SmartStops Comments: Another great article from our friends at Realinvestmentadvice.com. We love that they will go deep with analysis when there is just way too much bite-size headlines trying to calm investors nerves and support a “bullish” theme and we’ll have a V-Shaped recovery. The probability unfortunately of it being a V-Shaped is very very slim. The economics just don’t support that. So yes, we agree that we needed this unprecedented money supply expansion by our Fed to prop up our banks and companies so they don’t fold and so we have economy for people to work is is important. But as the economic picture becomes clearer , with no virus cure nor vaccine coming anytime soon, and a slow re-opening and with people realizing that the “E” in P/E , Earnings, is going to show a depressed amount as companies now have new debt on their books to have to pay back – all that unfortunately means the probabilities of future declines are much higher then the ones of a return to previous highs. Plus, previous highs reflect an overinflated market because of corporate buybacks which is another great article to read from them.. For those believing in a “V” recovery or that this isn’t a bear market relief rally, they really should read this.
The last line says it all: “So, with the entire U.S. economy shut down, 15-20% unemployment, and -20% GDP, earnings are only expected to decline by 10%?: We all tend to have “confirmation bias” as behavioral finance teaches us so you have to beware o how that is playing into your thinking. Of course no one can say exactly what will happen going forward since the market is a forward-pricing system and we have a wildcard with COVID and ability to get economy running full-tilt again. That’s why we firmly believe that a Buy & PROTECT approach (including hedging) is going to be your best way to protect profits and minimize losses. You can read their full article at: https://realinvestmentadvice.com/market-stalls-is-the-bear-market-rally-over-full-report/