March 27, 2020
Down Day/Up Week
Normally Abnormal
Can’t surprise you anymore with 1,000 point Dow down days. What should surprise you, though, is a 13% gain for the Dow in a week (from last Friday’s close). More of a shock and awe is the Dow’s move up from Monday’s close – – a 16.4% jump. This was the best week for the Dow since 1931. So, today we had another – what has become normal – near 1,000 point loss for the Dow. For the week, the normally abnormal massive move up in the Dow underscores the market’s extreme volatility. This week’s historical gain for the Dow is best accentuated by its record setting climb Tuesday. In Tuesday’s Market Update I wrote, “Today I get to share my thoughts about the biggest point up day in history. The Dow flew 2,113 points higher today. That is nearly a 13% jump. Today’s percentage gain was the greatest for a day since 1933.” Someone please share with me another word for ‘volatility’, I getting bored with repeating it.
As I noted in Friday’s Market Update, “…. This amount of fiscal stimulus is staggering. It is being called “Liquidity Infinity”. The Federal Reserve is a big part of what happened – and what has been happening. As of this minute, President Trump has just signed the largest economic stimulus package in history. Expect even more before the war against the coronavirus is won. In borrowing from “Buzz Lightyear”, we have liquidity to infinity and beyond!
In I said in my Investor’s Edge TalkPod podcast last week, “It’s like when your raffle ticket number is called…you must be present to win.” Do not be out of the market when these huge upturns occur. Peter Lynch said, “More people have lost money waiting for corrections and anticipating corrections than in the actual corrections.”
Here’s today’s scorecard:
This past week, the bull-to-bear ratio among stock market professionals polled by Investors Intelligence indicates that pessimism is widespread. That’s actually good for stocks. This contrarian indicator is worth noting. New bull markets have historically emerged from a universe filled with pessimism. Remember what super star investor Sir John Templeton said.
Hope this is helpful.
Thank you for your continued trust and confidence. I remain vigilant as I manage and oversee your investment account.
John