I was looking at how the stock markets fared in other “pandemic”-induced and other short-term panic situations, and thought I would share this one: In 2002, the markets traded at an intraday range of 2% or more for 29 consecutive trading sessions. Today is our 10th.
We are less than two weeks into this market puke. What’s happening with OPEC is a big deal, but there was a parallel in 2016 that ultimately was also a short-term puke. It busted a lot of people, but the markets as a whole were months away from one of the most bullish periods in stock market history.
Selling into panics is dumb all-around. All you do is lock in losses that will take many years to recover from personally. It is not a way to build wealth or stay wealthy.
My primary concerns with this event are political. Some people are clearly trying to spook the markets, and I don’t mean the drama queens in the mainstream media who stoke panics every time they can for the clicks. (With every single panic, they crank out the “This time is different!” pieces. Spoiler: It’s never different.) There was a rumor floating around that King Salman of Saudi Arabia was dead in the context of the Russia – Saudi oil spat. Business intelligence companies were circulating it too. It’s absolutely insane. There are so many voices of doom out there during these events, and you have to tune them out to stay sane. But countries don’t work that way. Panics are how you end up with nutty far-left leaders who promise comfort and a printing press. And it turns out, we have quite a few of those here.
I was talking yesterday about how the financial crisis fundamentally altered the way I think about panics. I was working with a large bond portfolio (including billions of dollars of asset-backed securities) then and it seemed like something was breaking every day. To me, it felt like the end of the world. Now I remember it as the time I thought about buying Citigroup, one of the largest banks in the world, when it was a penny stock and didn’t follow through.