The performance of small caps is more closely tied to the U.S. economy than large caps are, so with all 50 states in some form of reopening, there is potentially more growth for those companies while simultaneously having a greater defensive posture as they would be more insulated from a COVID-19 outbreak in another country.
However, as I’ve noted, due to the COVID-19 crisis, forecasting fundamentals is nearly impossible. When you don’t have access to fundamentals, you use technical analysis.
The Federal Reserve’s and the government’s massive and quick actions should stabilize what has been an economy in freefall, but we won’t escape a recession.
We humans like a narrative, a story we can relate to, because it helps us make sense of things, and that makes us feel more comfortable. The fact that the stock market was up about 19% over the previous four months, based on very little improving fundamentals, set us up for a tumble.
The market has been prodded higher by monetary stimulus, and the strong suggestion by the Fed to keep rates lower for longer has given the U.S. economy the potential to stave off a recession for all of 2020.
The market is going to move slower or faster toward fair value for a whole host of reasons, and to think it’ll get there on some exact day is just dumb.
Only three U.S. presidents have faced impeachment proceedings. It makes it hard for me to use impeachment threats or proceedings as a tool to determine where U.S. stocks will go.
Some Fed officials want another cut this year, and others could be convinced to do so if the economic data weakens. The Fed has continued to repeat the line that any decision made — cut, stay or hike — will be “data dependent.”
Where the economy might go from here is another conversation, but we do know that defaults on existing debt are relatively tame, meaning that consumers are not yet feeling overwhelmed.
Do you know who gets the worst returns in the stock market? People who buy something because it’s gone up in price and sell something because it’s gone down in price. Time and time again, following the crowd has proven to be the stupidest thing in the world of investing.
It's very easy for me to tell you what to do at extremes: Do what feels the worst and go against the crowd. But we’re not at extremes now; indicators are mixed. So what to do now?
Dalton -- Berkshire Hathaway, the multinational conglomerate headed by famed investor Warren Buffett, held its annual shareholder meeting this past weekend. It’s like Woodstock for...
