The big financial news over the weekend was that the Fed cut rates by a full point and made additional moves to make sure financial markets have plenty of liquidity.
Unfortunately, this was not enough to calm the market today. The volatility continues and is likely to last for weeks to come.
The analogy we use is an earthquake. After an earthquake there are always aftershocks. We are still experiencing the aftershocks of this market’s recent quake. We need for these tremors to stop before we make any big moves.
Right now, news is being reported through panic lenses. For example, one of the prominent headlines today read “Goldman Sachs warns the S&P 500 could sink to 2000”. That is 16% below current levels. However, If one actually reads the article, it says Goldman’s target for the S&P 500 is 3200—which is 35% ABOVE the market. Shouldn’t that be the headline?!
A Coronavirus recession may sound like a reason to sell, but it’s not. Stocks typically rise 3-6 months before a recovery. We are already in that window. At this time, we are recommending to stay the course.
Rest assured, we are watching the data carefully. We have a game plan in place to make moves based on our Three Dials investment philosophy. For now, try and tune out the media hype as much as possible and stay healthy. We will keep you posted.
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