Very few people alive have lived through a global pandemic like this.
Racism, police brutality, civil unrest – those things, unfortunately, are nothing new. Thousands of people gathering in cities across America, and in other parts of the world, to protest during a global pandemic, though? That’s new.
Who knows what the fallout will be from the protests of the senseless killing of George Floyd by a Minneapolis police officer? Let’s hope it looks like progress.
Similarly, who knows when coronavirus will stop tormenting our people, our world and the global economy?
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Given those unknowns, and the incredibly high stakes of both, it’s all but impossible to know what will become of the stock market next. The stock market uncertainty is palpable. Some think it will continue higher, as the market is forward-looking and it sees better days ahead six to nine months down the road. Others think stocks have recovered too far, too fast given that more than 40 million Americans are unemployed, more than 100,000 have died from COVID-19, and many parts of the economy (think restaurants, movie theaters, certain retail stores) have yet to re-open.
The push-pull between those two disparate trains of thought was on full display Monday, as Wall Street appeared unsure of exactly what to do on the heels of six nights of nationwide protests, and with new coronavirus cases and deaths stabilizing but far from going away.
The S&P 500 opened the day down, quickly rallied back to positive territory, then retreated and rallied again – all before noon. As of this writing, stocks were essentially flat to open the week, which feels about right. No one’s quite sure what to do with all that’s happening in the world right now—not even the big institutions who pride themselves on looking ahead and predicting hard-to-predict economic outcomes.
Accept Stock Market Uncertainty - Don’t Be Crippled By It
I don’t know the answer either. I’m not into stock market predictions myself, and especially not when there’s this much uncertainty in the world.
Societe Generale analyst Andrew Lapthorne warned that the “worst may not be over for the market.” Meanwhile, our Mike Cintolo, who is the best I’ve ever seen at timing the stock market, reports that all his market timing indicators are in positive territory, suggesting that stocks may continue to climb despite all the uncertainties.
Which one of them is right? Perhaps both—stocks may continue their improbable ascent for weeks and possibly even another month or two…then coming crashing back to earth when reality sets in. Until then, I would do what Mike always urges: go with the evidence. As long as stocks are climbing, don’t preemptively sell your stocks, particularly your best stocks.
Sure, feel free to prune an underperformer or two, or take profits on your biggest winners by selling a few shares. But don’t fully sell out of any stocks you like, and remain profitable, just because you’re worried they’re due for a fall. That may well happen. But until things start to head south, you’re better off not trying to time it.
And if you need some help figuring out exactly which way the market winds are blowing, I highly recommend you subscribe to Mike’s Cabot Growth Investor advisory.
In the meantime, stay safe out there, support the people who need it right now, listen to the people whose voices need to be heard, and hope for better days ahead.
Take joy in your investing. There’s so much sadness and pain out there in the world right now. Investing is the easy part—regardless of which direction the stock market heads next.
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