Special Panic Post 4-9-20
The 4/9/20 Monetary Panic
This was for a personal forum in Facebook last Thursday.
I rarely make a comment like this on the stock markets, 50 years in the business educates one to not make public statements, but today is unusual. Over the past 40 years Americans have been conditioned to believe that the markets are not a place where capitalism is financed, but are a playground for money.
It is probably not something to dwell on these days as we all try to help each other stay alive.
But what we are seeing is that Government manipulation increasingly makes the market less reflective of value.
The result, the market is not a safe place for one’s money at this time.
The stock market going forward may trade up or down at times. Just keep in mind that at current valuations you are buying 40 percent air.
Unfortunately there are no good alternatives for your money at this moment. Bonds have huge risk because when this Fed and Treasury intervention unwinds and they try to monetize this, interest rates will go up and bonds will plunge.
So your only real choice at this time is 90 day T-Bills and they pay virtually nothing. The point is to preserve cash. After the panic is over, there will be a time to buy the market when it reflects value, maybe a time when the price to earnings ratio is under 7.0. It may take a couple of years.
And then there is always gold which works during periods when someone in panic will pay you more for it than you did when there wasn’t panic.
And on another note, with no one in Washington thinking twice spending a Trillion dollars here or there to save some hedge funds or whatever, why don’t they work on getting a clean bill of Health for the nation, give everyone a series of Corona Virus tests 14 days apart, and an antibody test, 3 tests X 330 million people. I bet that specialized wrap would cost less than $ 3000 per person, one trillion total. Then we could go back to work, just ban all international travel until we get a vaccine.