What's going on??

Today the markets are getting obliterated. I have received several calls/emails as to why this might be happening so I figured I would write a little bit about the markets lately. I have a few thoughts that might help shed some light on things.

What is the likelihood of a "V shaped recovery"? Based on the Fed's recent position that interest rates will not be raised until 2022, it seems there might be more troubles ahead. Normally, a low interest rate environment is good for equities markets (too good) so the fact the Fed commits to not raising rates could signal things are worse in the economy than we think. It certainly seems like the Fed might know something that equities traders don't. This could indicate a much slower recovery than we hoped.

COVID is still an issue plaguing the country. Now that states are reopening, more cases of COVID are being reported. This is somewhat expected, but the markets over the last 2 months have been trading like the pandemic is over. It's not, according to most of the world's experts. If cases spike too much, it's possible the country has to do this all over again. Needless to say, that is not good for businesses around the country. There have already been millions of people laid off and thousands of businesses that will never recover from the self inflicted shut down of the economy.

The last thought I have is, the SP 500 has been up over 40% in the last 50 trading sessions. That is the best 50 day stretch we have never seen before. At some point, people have to start taking profits off the table. Stocks quickly became over valued and we were due for some type of pullback. I have been saying for weeks there are probably still turbulent times ahead.

Hopefully this is just a blip on the radar but it's quite possible markets are preparing for more bad news. This makes it all the more important to make sure your investments line up with your goals. Often times, when the markets get turbulent, people want to sell out of fear. Emotions are one of our worst enemies when it comes to investing so make sure you have a plan and stick to it.

Matt