Q: I have been sitting out this market decline with inverse etfs and HUV. I see the major North American indexes have again broken support and are heading for 2016 levels. 2016 levels would appear to be an important support level BUT the time-frame of the current coronavirus lock-down that could go on, in one form or another, for many months. The Imperial College COVID-19 Response Team in collaboration with the WHO Collaborating Centre for Infectious Disease Modelling and other organizations put out a report on March 16 (available online) that recommends the type of drastic measures we are now seeing implemented globally (social distancing of the entire population, home isolation of cases and household quarantine of their family members, ...supplemented by school, university, and business closures) in order to prevent serious loss of life (2.2 million estimated in the US alone) and huge social and economic impacts. The release of this report is what swiftly galvanized the current global efforts to contain the virus over the past few days. These efforts may seem harsh but are essential to avoid the worst effects of the contagion (as we are seeing in places like Bergamo, Italy).
The report recommends that these measure be maintained (to avoid rebound) until a vaccine becomes available, and that is estimated to take 18 months or more.
Now, we all know markets hate uncertainty. Hence the unprecedented volatility over these past few weeks. I don't see a silver lining yet, except of course the prospect of getting past the pandemic, which is a real possibility now that the correct measures are being taken. Therefore, I don't see a need to buy anything until we have flattened the curve and the markets respond accordingly. Until then we are likely to face further declines (to who knows what levels) with periodic relief rallies. Again, I ask, am I missing something?
The report recommends that these measure be maintained (to avoid rebound) until a vaccine becomes available, and that is estimated to take 18 months or more.
Now, we all know markets hate uncertainty. Hence the unprecedented volatility over these past few weeks. I don't see a silver lining yet, except of course the prospect of getting past the pandemic, which is a real possibility now that the correct measures are being taken. Therefore, I don't see a need to buy anything until we have flattened the curve and the markets respond accordingly. Until then we are likely to face further declines (to who knows what levels) with periodic relief rallies. Again, I ask, am I missing something?
