03/25/2020
We experienced something today that we have not been able to celebrate since February 5th and 6th…….having the Dow close on the positive side for two consecutive days. Hard to believe it has been that long, but at the same time not real surprising. It’s small victories like this that starts easing fears.
With the recent market surge I am seeing and hearing of a new ‘fear’ developing. That would be the fear of missing out (also known as FOMO in market talk). FOMO occurs when investors feel they are missing out on a market rally, and they start to invest without truly understanding why the markets are surging. Kind of the ‘shoot first and ask questions later’ mentality. When you get caught up in the FOMO herd you tend to do more harm than good in your portfolio. Sounds familiar, doesn’t it? The fear caused by the market collapse over the past three weeks caused the mass panic to sell – and history has shown that that panic selling does more harm than good over the long-term. FOMO is no different.
It is widely thought that, although the bottoming process is nearing the end, more downward volatility is expected over the next two or three weeks. The numbers of infected patients will continue to increase over this time period as more tests kits are made available and more accurate test results can be confirmed. Practically all economists and market analysts agree that once the markets see a leveling off of the number of reported new cases, that will mark the bottom and the markets will see a dramatic swing to the upside.
I saw a great quote yesterday: "Every storm runs out of rain". We have seen some breaks in the clouds these past few days. But don’t put the umbrella away quite yet. Hang in there!
