03-31-2020: The Data Matter

This morning, before the opening bell, the market is down just a bit. That's good news for our ULTRA-MAX and ULTRA strategies. And, with only one glaring exception, that is exactly what the data indicate should be happening.


So... what's the "glaring exception?


It's the market. Despite all of the sharply bearish trends of the major indexes and ALL 11 sectors, the market has thrown all of those trends to the wind and moved higher over the past few days.


Never mind that we are all in a shelter-in-place condition and the entire world's economy is at a virtual standstill. Let's completely forget about the fact that the coronavirus pandemic is far from under control. Who cares that never in history has the entire world's economies come to a sudden stop. So what if no one knows how the global economy can get restarted at some point. Let's just ignore the fact that the relief bill (and the others now working their way through Congress) is building up a national debt that is impossible to know how it gets paid back in the future. No one needs to worry about the triple B minus bonds that could get tripped into junk status and dwarf the financial crisis of 2008. No... Just as long as Uncle Sam keeps sending out the free money, all of the rest of these (and there are more) concerns are just frivolous fear mongering. Now is the time to throw caution to the wind and buy, buy, buy. The stock market is not in jeopardy of moving a lot lower... no... of course it's not.


Well... maybe we are at a bottom despite the data totally saying the opposite. But, maybe not.


I am not ready to assume Uncle Sugar is going to be able to throw enough money at our non-existent economy and there be no unintended consequences. Don't get me wrong... I am all in favor of helping people get through this time; and this is one time that the government can actually help, but paying people to not work (as important as that is, right now) is not how an economy gets back on its feet. It is ONLY a way to keep the economy on life support.


But, there are bright spots. Some of the service and health sectors are thriving in this pandemic. These two segments of the economy are in great need and some are stepping up in a big way. This is why I am putting some money to work today in both segments in our Tactical Growth strategy.


While the data point to more pain in the market, and while I think pulling out of this economic and physical pandemic will take longer than we all hope, I am very optimistic that we will come out of this at some point... not by the end of April, though... not in my opinion.


So far this year, avoiding the horrible buy-and-hold strategy that 99% of the investment world follows (and is being crushed because of it), my clients have not only avoided the massive losses of 20%, 30% and more; but have actually prospered this year. It is not easy, but sticking to the plan of reacting to where the market is and not where we hope it is, has proven to be the right course of action.


This doesn't mean every day or every week will be wildly profitable, but it does mean we will avoid massive losses and it also means we (my clients) will have far more equity to invest once this economy begins to get back on its feet than the buy-and-hold crowd, who will spend the next months, years (and maybe decades), getting back to even.


Stay safe out there.