Plenty of Buying Opportunities to Come at Lower Prices

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Don’t worry, you will have plenty of opportunity to buy more stocks at lower prices. There has never been a recession less than six months long and most last at least a year. This recession has only started.

After 11 years without a recession, the longest on record, the excesses in the system must be significant, a hard recession is almost mandatory to weed out the weak, sick, corrupt and/or zombie companies that have been created, think WeWork. It’s how the capitalist system works. Don’t believe the S&P 500 index, it is overweighted by a few bloated obese large cap stocks, mathematically fooling everyone by their overweighted mathematical index divisors.

If you just removed the few FAANG stocks from that index and only looked at the 495 other important stocks in that index, it is much lower. Just look at The Russell 2000 it is still deep in bear territory. As countries attempt to reopen , the full effects of the greatest recession since the Great Depression will emerge, governments will be less likely, and less effective at artificially propping things up with more stimulus after this as at the very least there is a moral hazard then and the question of when does it stop? The secondary economic shock effects from 30 million+ unemployed, the most since the Great Depression, and the largest yearly debt deficit ever in the history of the USA and never before simultaneous worldwide shutdowns will be the stuff of legends.

Meanwhile 2.3 billion people in dozens of countries (I.e. India, Brazil, Russia, etc) are still on the front end of their exponential growth curves and getting worse fast, and they have the least capability to fight this virus.

As everyone watches millions of bodies pile up in India the world will freak out. Think of all the companies that derive sales and earnings internationally from all those countries, the international sales/earnings for US companies will suck.

Then there is oil, there has always been a bad recession when ever oil prices did weird things, and are negative oil prices the weirdest thing ever? Do people think the populations of a half billion people in Middle East countries going bankrupt due to record low oil prices and record low oil volumes means they are just going to bounce back and start buying consumer goods in mass again? No way! They might even revolt and start a war or something, naw, the middle easterners would never do that, right! (BTW shouldn’t we bail out the Middle East, we caused the oil problems due to our forced shut downs, its not their fault, right! Lol)

As our economy attempts to open up in a unorganized patchwork in fits and starts, many people over 50, which is 1/3 or 110 million consumers in the USA alone , will be much more cautious about activities with groups of people, and do less activity with groups of people present.

This 50+ group will be much more cautious with spending and doing more saving to replenish their recently impaired savings accounts. Thus sales and earnings will be very weak worldwide and many small companies will not need to rehire most of their employees, this unemployment will be high, and a doom loop positive feedback cycle will prevail for a long time and without new government stimulus many companies will go bankrupt as business fails to reach levels prior to March 2020 and unemployment goes up and so on and so forth. And that’s probably the best case scenario.

If the death rates rise again as projected, and we have re-close the economy, it will create a complex multi round financial game theory conundrum that will boggle the best minds at the Federal reserve and economists for years , maybe decades.

And that’s if we find a vaccine someday, which has never been successfully done with any of the other several coronaviruses, Rhinoviruses, and AIDS virus, but don’t worry we will this time? And then of even if we find a vaccine let’s see, we have to produce 5.5 billion (70 % heard immunity) distribute 5.5 billion shots and give 5.5 billion shots! They must be dreaming! Even at one million shots a day it will still take 15 years, by then the virus will mutate and we have to start over. So yeah, I think you will get another chance to buy stocks at much lower prices in the not so distant future, just be a little patient.

 

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