We’re now in week two of serious disruption as a result of the coronavirus, and the markets are in the middle of what’s looking like an extremely steep crash. Only 1987 can compare, and those circumstances were totally different.
I’ve spent the week trying to sort out what we should expect to happen in the near- and mid-term projections. Most crashes usually take out about 42% in two months. This one has seen losses of 30-32% in just one. So we should expect the downswing to continue, but not immediately. The way I see it, one of the following two scenarios will play out.
- We’ll get a bounce early next week followed by another sharp downturn, on our way to that 42% dip.
- We go sideways for another couple of weeks before we start our downward run.
So it’s either going to be a couple of days or a couple of weeks, but it’s going to happen no matter what.
I’ve also been looking at safe havens for investing during what’s really a short-term crisis. You’re going to see a lot of volatility and should expect that to continue through whatever bailouts get distributed, and then Trump’s efforts to pump up the economy before the election in November. But I get into that and the coronavirus’ growth more generally later in this week’s rant.
Remember, the first crash comes sudden and hard, and that’s what we’ve been for the past week or so. But you cannot forget that the crash is not over yet. There’s still a ways for us to continue downward.