Wild Ride So Far in 2020

The S&P 500 just logged one of its worst quarters in history and one of its best quarters in history back-to-back in the first half of 2020.

Specifically, the S&P 500 lost 20% in Q1 while making about 20% in Q2. The only other times in history this has happened were both during the Great Depression (Q3 or 1932 and Q2 of 1938) (Source: @Sentimentrader).

I’ve written about the potential for huge price swings in both directions previously.

This puts the S&P 500 down a little over 3% on the year while the global stock market is down over 7%. Meanwhile, gold and bonds are up on the year.

 

Continue reading “Wild Ride So Far in 2020”

Deflation or Inflation?

A question I’ve received frequently the last couple months from many different people is about the potential for inflation given the unprecedented response to the Novel Coronavirus Pandemic. It is an important question because it impacts the best investment approach going forward as well as other personal finance decisions.

I understand the rationale behind the question. After all, trillions of dollars have been pledged between the Federal Reserve and the U.S. Treasury in the last few months in what essentially amounts to a “helicopter drop” of money on the economy. So, it is understandable that people are beginning to have concerns about the potential for inflation.

Ultimately, I believe we will get inflation mainly because the Federal Reserve will stop at almost nothing to make it happen, HOWEVER, we must allow for the possibility of getting deflation first. Continue reading “Deflation or Inflation?”

There’s Always A Bull Market Somewhere

An old saying is “there is always a bull market somewhere.” This year is no exception.

For the year, through yesterday’s close, we’ve witnessed long-term, “boring” Treasury bonds gain almost 24% and gold make over 9% while the global stock market has lost over 13%! All this in just about two months!

Even when things aren’t going well in stocks, it seems there is usually an asset somewhere at least holding up if not delivering positive returns. Continue reading “There’s Always A Bull Market Somewhere”