The Next Significant Bull Market
Far and away in the future we will query the "shoot first and ask questions later" pathway for investing…yet again.
The reality is the investing process sometimes just guts you, and it can last for a while.
But they do end.
In fact, historically the down periods tend to rocket back for years to come.
Why?
Well, all major setbacks cause one major shift in mindset: We shed the old and build the new. And we reconfigure, create and reinvent the new normal.
As much as everyone thinks that new normal is some sort of new phrase or thought, it’s been around forever.
It has happened after every shock. So, don't fret.
Things come out the other end better than before.
Think like Warren Buffett has thus far: Stay quiet, let the extreme record levels of panic work through the system.
And just like Chicago (or even Scottish) weather, if you don't like it right now wait for a few minutes…
The trade range beginning to form will provide ample long-term opportunity and rebalancing benefits. And remember the tax value of losses will increase as well, as we will surely see tax increases sooner than we think to begin to pay down the cost of this event.
The Chatter
What shape will the recovery mimic? Will it be a U or a V or a W or a Nike Swoosh?
Folks, it’s all just meaningless chatter and empty speculation from a podium lined with broken crystal balls.
The bottom line here is that COVID has not changed the underlying current.
The Barbell Economy© is here for the next 35-40 years, so get your surfboard and start paddling out into the storm...and be prepared.
As for Investor Sentiment?
Best to describe how investors are feeling at the moment as "In the tank."
And as much as this is going to be frustrating to hear, I can't tell you how good that is for the long haul.
After 38 (this coming August) years of doing this, I can assure you it feels like I am watching a replay that I’ve seen before like 10 times.
The AAII survey is now showing two bears for every bullish investor respondent.
And the Bullish read itself is now just 4 ticks away from the lows we reached in March of 2009 - some 17,000 Dow Jones points ago:
In a nutshell - for every person who thinks good about the future, 3 think of it poorly.
It matches well with the stats we saw from BAML recently.
Net-net, sentiment is precisely where you want it for long-term horizons ahead.
That does not mean it all changes overnight.
What it does mean is that history proves to us that every bear market or shock creates the foundation for the next significant bull market.