This Is What a Bear Market Feels Like
Simple news for investors today; we’ve crossed the dotted line. For the first time in eleven years, markets dipped into bearish territory to signal the end of the longest bull market ever. Burn baby burn!
But don’t lose your marbles. A 19.99% drop is a correction, and a 20.00% drop is a bear market. President Trump has banned all flights from Europe to slow the pandemic, but panic-sellers reckon Congress is too busy blaming the 0.01% to grant any more power.
Traders, used to racking up incremental 0.01s, just saw a “death cross” pattern emerge in copper prices. They dub it Dr Copper for its ability to foreshadow wider markets. Longer-term investors sold off yesterday “in disappointment about fiscal policy. It isn’t clear how it’s actually going to help,” says Mike Reynolds, investment strategy officer at Glenmede Trust.
European Central Bank (ECB) president Christine Lagarde has promised the Eurozone something super-aggressive this week. It may be more radical than Britain’s interest rate cut yesterday. Angela Merkel will do “whatever’s necessary,” and businesses will draw on lines of credit to stave off cash flow risks. Almost everyone’s doing everything, but stocks still won’t find a bottom!
Dare to squint at your portfolio during this market bloodbath, and you could improve it. There’s at least a shade of self-doubt within all of us, even the big guns atop Invstr’s fantasy league, and that could be the unlikely catalyst for finding new alpha.
It’s time for a sanity check. Go back to first principles and fess up to why you bought what you bought. The downward terror brings out honesty, so the weak picks get tossed, the high-conviction picks stay, and you feel more in control of an optimized portfolio at the end of it. Oh, and you saved some money on gas this week! Stay positive!