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Virus or Politics?

The market has been EXTREMELY volatile, with 3% swings on a daily basis.

Today’s 4.22% rise in the S&P 500 has been attributed to the results of the Super Tuesday Democratic Primaries.  The market prefers Slow Joe over Socialist Sanders…no surprise.

But what about COVID-19 hysteria?  I’m sure that will be back tomorrow, which is why I’m just holding my positions and not trying to time the volatility.

Here’s what I told my clients today:

  • During the month of February, COVID-19 has wreaked havoc on the markets.  At one point the S&P 500 was down over 12%, when it bottomed on February 28. Since then volatility has been abnormally high but trending up.
  • I expect this volatility to continue until the virus goes from pandemic hysteria to endemic reality.
  • Unless future expectations change drastically, I intent to hold our positions through this rout.  This is a similar strategy that I used during the 2018 crash, when markets plunged nearly 20% and then quickly recovered.
  • I have no idea where the bottom will be, things could get a lot worse. However, LONG TERM, I see no lasting consequences to hinder consumption, therefore future corporate profits should remain strong.  At current levels, the S&P 500 is at a favorable historic valuation.
  • I think this is a good time to BUY, not sell.

As always, invest with CAUTION.

PS- more about politics in future articles, stay tuned.