The Investing Diaries - Mar. 24th 2020
March 24th
Source: The New York Times
Well the Coronavirus continues to spread both worldwide and in the US. There are now over 400,000 cases worldwide and deaths are approaching 20,000. This is continuing to build in the US and I expect us to see a large spike in cases very soon as tests become more prevalent. There are many states that are in lock down now or going into it later this week, but some are still having people go out and about to non-essential jobs and put other people at risk. One of these states is the one I live in, Florida.
New York has been hit extremely hard and their Governor, Andrew Cuomo, has been outspoken in the media about the lack of help and the dire situation that is occurring there. Could New York be a re-enactment of Italy? It’s too soon to know but things are not looking good.
Either way, it is spreading rapidly and if you can do anything to help our courageous healthcare workers please do so.
The Markets
Well the bounce is here! Don’t be fooled though, even with the DOW setting an all time point high and the largest gain in 87 years I am not convinced. The green day, a 15% jump in my portfolio, was an amazing mental break from the losses and believe me I am grateful for that if nothing else.
The jump, in my opinion, came on the backs of a few things:
Stimulus hopes. The passing of the stimulus is like an upcoming trip, sometimes the hope is better than the reality. Why else do you think the government delayed the vote until after market close?
Investors going long. We have had over a 30% drop, many funds are beginning to take long positions. Add to this the voices of men like Ackman and Tepper saying they are buying and optimism will run wild.
Economy Re-Opening Talks. Even though I believe these to be completely false, this constant rhetoric that has now been started by Trump is leading people to believe that the country is almost out of the woods on this virus. Not even close in my opinion.
Today’s Activities:
Today I just sat and watched as many companies rose in the green and investors cheered. I will buy later on but today was a day to watch on the sidelines for me as I have used the past week to deploy a lot of cash.
I believe that the market will decline another 15-20% from today’s close, something that will set in when people realize that the stimulus will not fix job losses over the next few months and that the economy still has a shot to enter a recession.
Sitting on 25% cash right now, looking to purchase more in the near future.
Stay safe and stay distanced.