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Why Am I So Confident?

In times of crazy market gyrations, there are always reasons. Those reasons seem imperative at the time and often portend a terrible fate. Yes, there have been some dark times, particularly around times of war. Other times excessive valuations are the cause of necessary and painful realignments. Whatever the cause, the rationale at the time always seems so logical and so scary. Let’s face it, only scary factors create the need for such price dislocations, and this one is surely perceived as a doozy.

But the COVID-19 doesn’t scare me nearly as much as the financial collapse in 2008. That seemed systemic, and seemed to spell certain doom on numerous fronts. Surely there will be dark times for the travel and dining industries this time, but other companies have needs for more than 100,000 new workers. Among them: Amazon and WalMart. Some workers will find new opportunities they never dreamed of. Others won’t be so lucky. That’s the beauty of the free enterprise system. With the American social safety net, it’s not totally sink or swim.

People ask me why I’m so confident this time won’t be different; why is this not “the big one?” Other seemingly darker times have always, I repeat ALWAYS, resulted in price reversals, which has ALWAYS resulted in new highs. Planning for this time to be different is a fool’s errand. Sometimes the reversals happen quickly, and it is universally true that it is darkest before the dawn.

Here is a history of the big downward moves and recoveries in the market that have happened in the past 75 years. Read with hope and confidence in a brighter future.

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