I like to keep my investing simple. You only have to know which way the market is going and that is either is up down or sideways. If you don’t know which of these directions is the future why would you play the game?
In the current circumstances complex nexus of what-ifs that creates that broad market call has been simplified.
If there going to be a material Coronavirus second wave?
If yes, the market will crash.
So that is all you need to consider.
Coronavirus second wave, yes or no.
So as I write the Florida beach resorts are sold out going into memorial weekend. Hilton rooms were selling for $800 a night. They are all sold out now. Americans are going their fun loving way back into the world.
What is to stop the virus raging back?
So the market will crash.
So what happens next.
Its back to my core predictions.
This was from my April posts on Forbes.:
Is is now this:
I told you I like to keep it simple.
But… this is the other option:
Which I posted at the beginning of April.
If you saw Warren Buffett AGM a few days after I posted this, you would have seen his version of this chart and a full on exposition of the Crash of 1929 and the following historic Depression. The second slump in 1929, said the Sage of Omaha was brough on by subsequent bank failures. He then sold down his Goldman Sachs holding. While the media reported his ‘don’t bet against America’ tag line, I took away ‘OMG Buffett says 1929.”
A replay of the 1929-1932 depression would not be brought on by banmk failure, it would be set off by the reaction to a second wave of the Pandemic.
The world economy would not survive in its present form if there was another lockdown and even the risk of another lockdown will crash the markets.
It might not even take a second wave of the pandemic to the bottom of the W but it would certain get us there quickly. A large fast bounce will certainly set off the next leg down.
The W market future would be the map of a borderline survivable economically recovery, a couple of years of gritty clawblack. but a 1932 situation will require an inescapable economic reset.
These two outcomes are not fate, a lot of incredibly clever people are working flat out to avoid ‘the Great Depression 2’ and they really are very good at their jobs, however it will take some incredible political contortions to escape economic annihilation if there is a second wave of the pandemic.
We will know within a couple of weeks.