Hey Friends. I hope my post finds you in good health. Surely, we are all more than ready to see this virus storm lift. I’m in my 60s now and none of my friends, even those who are 90 or older, recall a time like now.
As to economic and market expectations, there are far more questions than answers. Uncertainty increases risk and while we hope the virus is being contained and conditions improving, there’s still little that’s understood about the virus. Yet the stock market has rebounded from pandemic lows in remarkable fashion.
Today I thought to share some thoughts, and/or some articles on the stock market amid this COVID-19 situation. However, there is an article from CNBC today that describes the current landscape pretty well. Go here to read.
Some key quotes from the article are:
“If stocks were handicapping such a quick resurgence in the economy, one would expect “early cycle” groups such as autos, banks, consumer durable goods and retail to lead the market. This is the opposite of what’s going on.”
“Big, steady secular-growth stocks in technology, healthcare and consumer staples are holding things together at the big-cap index level against a steady undertow from shares of cyclical businesses with flagging demand and shakier balance sheets.”
“Amazon’s $1.2 trillion market value, in fact, now accounts for more than 40% of the entire value of the S&P 500 consumer-discretionary sector.”
“And at some point, the extreme reliance on the mega-cap growth leaders can go too far. The five largest stocks already make up more than 20% of the S&P, pushing record concentration at the top.”
“Things might soon line up for investors to start making a more aggressive bet the worst will pass before long and the real economy can start the healing process. And perhaps that bet will prove premature for a while once its laid.”
Lord willing, we will be able to be much more out and about, and spending time with one another very soon.
Until next time, may God bless you.
It is good to hear your are well, Dr. Allen. I think that now, more than ever, using methods outlined in your book are going to be very beneficial.
I remember speaking with you about the difficulty in choosing the RIGHT “on sale” company. I believe that time is coming again soon.
Most importantly, I’m grateful that God uses you in a way that makes sense to people like me.
Stay safe and God Bless!
You’re gracious in your words and I appreciate you. Such times as these reflect the risk of not preparing for a rainy day; that is, not setting aside a sufficient emergency fund for a worst case scenario. That’s what a company’s balance sheet reflects — it’s financial flexibility to not only take advantage of growth opportunities but also to weather a storm. Many companies live on the ragged edge to report another penny or two of earnings per share and thereby compromise the financial health of the business; and there will be casualties (bankruptcies) from this COVID-19 to those who have not prepared adequately. Biblical principles of good stewardship apply not only to individuals but also to management teams. The balance sheet is a financial picture of stewardship effectiveness and preparedness. Indeed, one has to buy the right companies when they are on sale. Thanks for your comment, friend.