Home About Archives RSS Feed

@theMarket: Investors Reduce Risk as Stimulus Talks Fail

By Bill Schmick
iBerkshires columnist
Hope springs eternal, but even the most strident bulls threw in the towel this week. American politics took precedence over the country's economic well-being once again, as both political parties refused to compromise on a stimulus deal.
 
But it wasn't only politics that spooked investors. Across the Atlantic, investors watched as COVID-19 outbreaks escalated across Europe. Germany, Austria, the Czech Republic, and Italy reported new records in infections, while France announced a curfew in order to stem their own skyrocketing cases. In the U.K., Londoners are now banned from mixing with other households indoors.
 
In this country, despite denials by a large portion of the population, as well as some in government, coronavirus cases are surging across the nation. In the fall, schools, despite warnings by medical authorities, opened anyway with predictable results. Students became super spreaders, infecting their classmates and extending the infection into the surrounding communities. Now, U.S. medical experts are warning that the onset of cold weather and increased inside activities could generate a second resurgence of the coronavirus.
 
What could this mean for the U.S. markets and national economy? If we follow in the footsteps of the European Community, the U.S. could see an avalanche of new restrictions forced on individual cities and states, not by the government, but by the coronavirus. That's just for starters. Businesses would likely close, but if past actions are any indications, that would have to wait until our already-weakened national hospital system ran out of beds and hallways to treat coronavirus victims. Let's hope this doesn't happen, but you should be prepared if it does.
 
Only now are investors beginning to realize that a "cure," or at least a vaccine (despite the many statements of our officials outside of the medical community) is taking far longer than promised. It appears that even if there is a breakthrough tomorrow on this front, it would be far too late to save the country, or the economy, from a potential winter COVID-19 surge. 
 
Despite the difference of opinion between who is right, or wrong, what is fake news, and what isn't, there are two truths that investors should understand. Number one: COVID-19 could care less about what you think, whether you wear a mask or not, or who you are going to vote for. It will do what pandemics do, so adjust accordingly. In my opinion, the best advice so far has been given by the medical community. Listen to it.
 
Number two: the stock market calls it as it sees it. It can be wrong at times, but only for a short while. In the end, the market ignores the hype, but not the facts, leaving investors who ignore its directions holding the bag.   Right now, the U.S. markets are not giving us clear guidance, which reflects the uncertainty of this health crisis, lack of more stimulus, and the noise of the political elections, so look elsewhere.
 
Europe appears to be 4-6 weeks ahead of the U. S. in their battle with the coronavirus. Investors should therefore be following the events in Europe closely. If additional restrictions begin to pile up and/or the virus cases continue to rise, watch and compare what happens to Europe's main stock indexes as a prelude to what might happen in the U.S. in November.
 
The markets will continue to move up and down next week, as they have this week. As for the future, what I can promise you is that over the next 18 days, markets will become even more volatile than they have been month-to-date. After that, it depends on COVID-19.
 

Bill Schmick is now the 'Retired Investor.' After working in the financial services business for more than 40 years, Bill is paring back and focusing exclusively on writing about the financial markets, the needs of retired investors like himself, and how to make your last 30 years of your life your absolute best. You can reach him at billiams1948@gmail.com or leave a message at 413-347-2401.

 

0 Comments
     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
North Adams Shop Connects Art, Greenery and Curiosities
Limited Parking Causes Issues on Mount Greylock Summit
Mount Greylock School Committee: No Need to Gauge Community Support for Fields Project
Butterflies Like it Hot at Mountain Meadow
Pittsfield Developing Plan for Bicycle Network
Children Learn About Wildlife at Richmond Free Library
PHS Names 57 AP Scholars
Berkshire United Way Hires Director of Donor Engagement
Mount Greylock District Enrollment Down, School-Year Start Survey Positive
BArT Upcoming Enrollment Deadlines
 
 


Categories:
@theMarket (347)
Independent Investor (450)
Retired Investor (17)
Archives:
October 2020 (6)
October 2019 (1)
September 2020 (6)
August 2020 (6)
July 2020 (10)
June 2020 (7)
May 2020 (9)
April 2020 (9)
March 2020 (5)
February 2020 (7)
January 2020 (10)
December 2019 (7)
November 2019 (8)
Tags:
Taxes Stocks Jobs Rally Fiscal Cliff Selloff Retirement Bailout Election Debt Pullback Economy Japan Federal Reserve Euro Crisis Recession Banks Markets Stock Market Deficit Europe Europe Interest Rates Currency Stimulus Congress Metals Housing Energy Commodities Greece Debt Ceiling Wall Street Oil
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: Markets Are Going Higher
The Independent Investor: Does Cash Mean Currencies?
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
@theMarket: Politicians Play Cat & Mouse With Investors
@theMarket: Investors Reduce Risk as Stimulus Talks Fail
The Retired Investor: China Leads Global Economic Recovery
@theMarket: One way or Another, Markets Expect More Stimulus
The Retired Investor: U.S. Moves to Nail Down Strategic Metals
The Retired Investor: Halloween Could Be the Holiday Test Case
@theMarket: Markets Feel the Heat
The Retired Investor: Back to the Future in America's kitchens
@theMarket: Investors Face a Rollercoaster Ride
The Retired Investor: Bicycles Sales Are Booming