With the subject of the Coronavirus sucking up all the oxygen in the room, no other story has had much of a chance to get any traction. All the major indexes we follow had good performance in April. In fact, they had the best month in over 30 years. Of course, that did come after a disastrous March. The Dow was up over 11%, the S&P 500 was up 12%, the NASDAQ 15% and the Russell 2000 13%. However, all those indexes are still at negative returns for the year. That is no surprise. The unemployment numbers have risen from 3.5% to 18% in just a few weeks. So we have gone from having the best unemployment figures in 50 years to having the worst unemployment figures in 90 years. Most Main Street businesses are still closed. Old guys like me, at least those of us who still have our hair, are starting to comb it down over our ears like we did in high school. Even though the classic definition of a recession is two consecutive quarters of negative growth, there is no doubt we are in a full-blown recession right now. The first two months this year looked good for growth. The stock market hit a new high on February 12th and the economy was poised for a 2.5 to 3% growth rate for 2020. Then March turned 3% positive growth to 4.8% negative growth. Projections are for continued contractions in the economy for the rest of the year.
Many governors are trying to safely open up their states. But who knows what’s safe? It looks like the curve of new Coronavirus cases have flattened some, but how open can we get before the curve starts to bend back up? That’s a question no one can answer at this time. But one thing we are aware of, and that’s the fact people need to work and make a living. Those of us who are still employed and can work from home are not affected like some workers who may have no savings, cannot do their job from home and who may have lost their job because of it. These are the ones who are hurting the most and these are the ones who most need for businesses to get back into business.
We spent almost eleven years in a secular bull market, the longest bull in history. And from March 9, 2009 to February 12, 2020 the Dow rose from 6547 to 29515, not counting dividends. That is a 350% gain in just under eleven years. Once the virus that has us so locked down is defeated, will the market start another climb like this? Maybe not quite so dramatic, but yeah, probably. Will you succumb to the hucksters and salesmen that preach guaranteed interest products? No, you won’t. You know that no one has ever become financially independent by earning the interest that banks and insurance companies pay. But if you listen to most of the weekend financial shows on the radio you’d think that those products they sell, like the different forms of fixed annuities, will save you from that dastardly stock market that is only out for one thing, and that’s to make sure you live out your old age in poverty. There are 14 financial radio shows on each weekend you can listen to, including The ProVest Perspective. Six of them are replays, meaning there are eight different providers. There is one other CFP® on besides me, and he does a really good job of providing original content and useful information. The remainder of them, quite frankly, are simply trying to scare you out of the stock market so they can then sell you one of their annuities. They are salesmen, pure and simple. They’ll talk about politics. They’ll talk about how bad the stock market is and how you can lose all your money if you dare invest in it. Why are they so desperate to trash the stock market as a place to invest? Because they know they couldn’t sell their high-commission products to you if you knew the whole truth.