Congratulations on not panicking and selling in last week’s horrible sell off! Give your future self a high five. The Dow and the S&P 500 have recovered from the lows set last week by 20%. This large rebound technically ends a very short bear market and is the start of a new bull market, although I would not be surprised if we tested our market lows one more time before we have a large move upward. There is a saying that bear markets die on bad news.
The market moved up despite 3.3 million people filing for unemployment, the worst ever, but not as bad as some were predicting. It is important to know that the markets and the economy do not run in parallel. Generally, the stock market is about six months ahead of the economy. We expect this quarter’s economic numbers to be one of the worst ever recorded, but this appears to be priced into the market.
As I have written previously, for markets to stabilize, we need to see coronavirus cases begin to flatten. At this point we have no indication of this, and many models show we may be a few weeks out. We also need to understand what the final stimulus bill will look like. By this evening, we may have a final vote in the House on the “Coronavirus Aid, Relief, and Economic Security Act” also known as the CARES Act. Here is what we know now as it relates to personal finance.
If anyone has a job loss, reduction in pay or any other cash flow concern, please do not hesitate to reach out to us. We are here to help you through tough times as well as prosperous ones. We are available on GoToMeeting for review meetings or on-demand meetings.
Written by: Casey Smith