Need to Know: When to buy during an ugly stock market rout? These charts have the answers.
There is some good news out there as the epicenter of the novel coronavirus outbreak — Wuhan — reports no infections for the first time, though elsewhere cases are rising.
And financial behemoths have turned the coronavirus fire hoses on full blast, with the Federal Reserve and European Central Bank both announcing big new measures to calm markets overnight. That seems to be working just a little bit, though relief may be fleeting. Still, the 25% drop for the S&P 500 so far this year has tempted some big investors back in:
For the first time in years I am now not short any U.S. stocks. I covered my last three shorts today at 2:37 p.m EDT. The profits were just too great to not harvest, and the panic is palpable.
But those big players don’t represent the majority. The carnage across global markets, constant coronavirus bad news updates, lockdowns, precarious grocery-store visits and employment uncertainty make getting out of bed in the morning a major achievement.
Our call of the day comes from Michael Batnick, director of research at Ritholtz Wealth Management, who asks shellshocked investors to take a deep breath and observe some bear-market history.
“When is the right time to buy stocks?” he asks in a blog post. “It doesn’t matter when you buy, only that you buy,” is his answer. He highlights charts showing when past bear markets have bottomed — in red. To be sure, where we are in that process now is something no one really wants to wager on.
Here are his examples, starting with 1932:
The early 1960s:
And while the coronavirus crisis could rip up the bear-market playbook, if this chart is anything to go by, they do end, as he notes:
Batnick says those sitting on cash and scared of more stock meltdowns should break up purchases, perhaps picking one day of the month to buy for the first four months.
”Whatever it is, it doesn’t have to be rocket science, it just has to exist. It’s also worth saying the obvious, which is that you don’t have to have 100% of your portfolio invested in stocks,” he says. Read the full blog here.
We are clearly in for a rough time, so stay safe out there and keep your chin up. Here are some Spanish Carrefour supermarket workers, definitely in the front lines of Europe’s virus battle:
Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate. https://t.co/RhxuVYPeVR
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