Irrational behavior is taking over markets (and grocery stores), presenting opportunities that we have not seen in a long time. Obviously, the human health issue resolution is first and foremost in our minds. The central banks and the powers that be are busy trying to keep order in markets and dispersing cash to citizens and lending to companies. They are resorting to the 2008-2009 playbook. This will help enormously.
The S&P 500 is now down 28% year-to-date. The lack of liquidity in markets has become a big problem as real buyers remain scarce. At three weeks, the speed of the decline is one for the record books. Everything from stocks to municipal bonds to high yield debt is being discarded with reckless abandon at huge discounts to fair value.
We have no idea how much more there is to go, but the number of bargains appearing is quite high. Businesses are being offered on the stock market at valuations that should provide compelling returns over the long-term, but with high volatility in coming weeks and months. We are quite busy looking at new investment ideas.
We suspect that virus concerns will remain in the headlines and our daily lives for weeks and months. We don’t like to talk about compelling investment opportunities arising from a health crisis, but it is part of our job. We will simply stick to our knitting. We wish you all good health and know we will all get through this.
The views expressed on this blog are the opinions of the authors. This information is not intended as investment advice or to recommend the purchase or sale of securities. More information on Strategic Balance, LLC may be obtained by contacting investor relations.