By: Matthew Theal, CFP® & Joshua Winterswyk, CFP®
Every Friday afternoon we recap what we are reading and the content we have produced. We hope you enjoy!
The stock market experienced another great week. The massive rally has confused bears and brought on many doubters who commentate on TV. These people are dumbfounded as to how the market can be going higher when the number of COVID-19 cases is increasing and the economy is weakening.
The answer to this is the economy is not the stock market, nor is the virus the stock market. I remember back to 2009 when the economy was very weak but stocks returned over 30% that year. The lesson I learned was the stock market is forward-looking and participants are looking are six, 12 or more months done the road.
The chart below shows how the number of COVID-19 cases has increased, so has the stock market.
As the U.S. gets the virus under control, over the next two weeks, I have to wonder if the market will turn down again as it anticipates the economic recovery could take longer or there’s a string of bankruptcies? That said, the thing about trying to predict the direction of stocks is that no matter what you predict, you will end up wrong at some point.
Best From the Web
Many people are worried about a food shortage, which is unlikely especially in the U.S. In fact, according to this piece, farmers who supply restaurants are having to dispose of rooting food because orders have plummeted.
Our great State of California moved swiftly and aggressively to implement social distancing measures like shelter in place. Because of this, California has seen a lot fewer cases than New York or other states who lagged on their response. Unfortunately, we aren’t out of the woods yet and experts predict we will be distancing for a long time to come.
Everyone loves a good conspiracy theory but the theories circulating about COVID-19 are hogwash. This NYT article dives into all the different theories. I think that conspiracy theories are fun for entertainment but that’s where they must stop. Drinking diluted bleach is a great way to kill yourself and the virus.