Friends

You may have noticed over the past few weeks that we try to temper our enthusiasm on up days, and try not to get too disturbed by down days. The up days are great, and mostly they have been fueled by Fed liquidity, then down days happen and we focus back on how difficult this all is to predict and quantify. It’s a battle between the Fed’s liquidity and the reality that the economy is almost totally shut down at the moment. Today, worries about the economy had the upper hand.

For the day, the Dow Jones Industrial Average was down 445 points to close at 23,504. The S&P 500 was down 62 points to finish the day at 2,783. Gold was down $22 to trade at $1,746 per ounce, while oil was up $.33 to trade at $20.42 per barrel WTI.

We continue to get decent news on the flattening of the virus curve, but we are getting mixed signals about when we will be able to reopen the economy. Today it seemed like the angst over opening the economy too soon and perhaps seeing a resurgence of the virus overshadowed the benefits of getting the economy back open. This is going to be a rocky road ahead, and markets will likely see good days and bad, so we won’t get too encouraged or discouraged on a daily basis. Corporate earnings are rolling out now, and, not surprisingly, they are going to be a mess.

We sent out a video today. If you missed it, we linked it again below. We’re hoping these will be helpful.

Have a nice evening everyone.

[youtube https://www.youtube.com/watch?v=nViUyh4WsdM?feature=oembed&wmode=opaque&showinfo=0&w=1200&h=900]

Jim

Friends

We got another horrific weekly jobless claims number, but that was certainly expected. What was not expected was that the Federal Reserve found another kitchen sink to throw at the situation. Previously, the Fed committed billions, if not trillions of dollars to support government bonds, mortgage bonds, investment grade corporate bonds and money market funds. Today, they stepped up by pledging another $2.3 Trillion dollars to support the junk bond market and the municipal bond market. Basically, the Fed has stepped in to support everything but the stock market, and I wouldn’t be surprised if we head back down to new lows at some point that they would step in to buy stocks. Simply put, the Fed is really ALL IN.

Since the weekly jobless claims number wasn’t a surprise, and the Fed action was, it was the bullishness of the Fed action that helped move stocks higher. By the close, the Dow Jones Industrial Average was up 285 points to finish the day at 23,719. The S&P 500 was up 39 points to close at 2,789. Gold was up $45 to trade at $1,730 per ounce, while oil was down $1.63 to trade at$23.46 per barrel WTI.

It was a very good week for stocks. We still remain cautious because there is still so much that is unknown, but the good news is that the forced selling that we saw in March is likely behind us, and the Fed is a force to be reckoned with. Stocks have been able to recover about half of the first quarter losses and that, at least, has calmed things for the moment. Remember, the markets are closed for Good Friday tomorrow, so we’ll be back at it on Monday.

Happy Passover and Happy Easter to everyone. Have a great weekend.

Jim

Friends

Now that we all know that we’ll all be in our homes for a least another month, I guess we’re going to have to come up with new ways to entertain ourselves. I went out at lunchtime and started my car (hadn’t in 15 days). It still works. Let me know if you have any fun ideas.

As for the markets, the news that the doctors and scientists are dictating policy actually seemed to come as a bit of relief to investors. Also, we continue to get encouraging news about vaccines and therapeutics, and that is certainly a positive for the market psyche. But, the damage to the economy is still going to an unknown that investors are going to have to deal with as the weeks and months go by.

As for today, stocks spent the day in positive territory and volatility actually wasn’t that bad. By the close, the Dow Jones Industrial Average was up 690 points to finish the day at 22,327. The S&P 500 was up 85 points to close at 2,626. Gold was down $19 to trade at $1,635 per ounce, while oil was down $1.41 to trade at $20.10 per barrel WTI.

The quarter ends tomorrow, so there is hope that portfolio rebalancing might add a little more fuel to today’s rally. But, as we move into the second quarter, the unknowns greatly outweigh the knowns. We need to prepare ourselves for more volatility going forward, as headlines from day to day are sure to be challenging. First, let’s see how the quarter finishes out tomorrow.

Have a nice evening everyone.

Jim

Friends

It looked like stocks really wanted to go up today, but alas, it appeared that more liquidation was occurring, it was quadruple witching Friday, and basically investors were scared to buy much of anything heading into the weekend. As more and more forced shutdowns occur, the economic fallout is becoming almost impossible to handicap at this point. But, so much of the selling of all assets in times like these- stocks, bonds, gold, etc. stems from firms being leveraged.  Leverage causes liquidation and having to sell assets at any price.

The important thing to remember is that investors like us do not use leverage. We are not forced to sell assets at fire sale prices. Indeed, as we have mentioned, our portfolios are set up just so we don’t have to do that. We always have a good portion of our allocation in safe, stable securities which are designed to hold steady in these times. If we need access to capital, we don’t have to sell stocks at the worst time, but instead can tap our stable assets while stocks take time to recover.

But, as mentioned, stocks just couldn’t stay in positive territory and by the afternoon, things began to fall apart once again. By the close, the Dow Jones Industrial Average was down 913 points to finish the day at 19,173. The S&P 500 was down 104 points to close at 2,304. Gold was up $7 to trade at $1,486 per ounce, while oil was down $2.34 to trade at $23.57 per barrel WTI.

It was another brutal week for markets and market participants. Despite the efforts of the Federal Reserve and Congress, we simply need good medical data and information to stem the tide. I know I keep saying it, but it keeps on being true. The Fed has been heroic in their liquidity providing efforts, and Congress will deliver something big soon, but fear and anxiety is what is gripping not only this nation, but the world. As I have continuously said, we will be here for you fighting every day to deliver the best service that we can to you. Keep your spirits high and your loved ones safe.

Try to have a nice weekend everyone

Jim

Friends

Today surely felt like a day where fear met reality, and stocks basically were overwhelmed by headlines. The WHO finally declared that the world was experiencing a pandemic with regards to Covid-19. Cancellation of sporting events, concerts, rodeos, and gatherings of any type continued to make headlines, and as each hit the tape, stocks took another leg down. We have said for some time that global economies were going to be affected by Covid-19 and over the past couple of weeks, the markets are coming to grips with that. The problem is, that no one knows how deep the economic slowdown will be. Given all the cancellations, and reduced travel etc., the pain is going to be quite significant. But, as long term investors, we have to understand that however bad the pain will be, and however long it lasts, it is a temporary phenomenon. We talk all the time about disruptions that will happen, and that when they happen we always feel like it’s the end of the world. This is a new one. A health crisis, and the fear it is causing, of this magnitude hasn’t happened in my 35 years of managing money. I’m pretty sure that we won’t turn the corner until we get good health news-drug treatments, vaccines, etc. We will get responses from central banks and governments around the world, but until we get good news on the virus, it’s not likely the others will matter for more than a short period of time. We will likely continue to see violent counter trend rallies, but they are likely to be met with more selling, as have the few that we have already seen. Selling begets selling as fear begets fear. Until we get some good news on the virus, it’s going to be a rough ride.

As mentioned, stocks collapsed under the weight of a series of headlines as for the day, the Dow Jones Industrial Average was down 1,464 points to close at 23,553. The S&P 500 was down 140 points to finish the day at 2,741. Gold was down $18 to trade at $1,641 per ounce, while oil was down $1.62 to trade at $32.74 per barrel WTI.

We will continue to keep you updated on market proceedings. As we have mentioned, our job during these moments is to help you deal with the stress and fear of times like this. Managing human behavior is vital right now. I know it is not easy, but that is what you have hired us to help you do. I have heard from many of you in the past couple of weeks and have enjoyed our conversations, which are sometimes difficult but necessary. Don’t hesitate to call in to hear a friendly voice. We’ll all get through this together, just like we did the financial collapse of 2008 and 2009, the Dot.Com bubble of 2000-2003, 9/11, the Asian contagion in the 90’s, the 87 Crash …

Have a nice evening everyone.

Jim