What Is Going On?
Updated: Jun 27, 2020
The last two weeks in particular have been extremely volatile, and quite frankly confusing for a lot of investors. We've done our best to provide a running list of news, insights, and opinions from industry profesionals.
WHY IS THE MARKET GOING UP?
In the face of rising unemployment and global economic instability it is fair to question how the stock market has rebounded the way it has.
Some professionals, including the Chairman of O'Shares ETF's and Shark Tank Investor Kevin O'Leary think a large part of it could be investor demand. After the market dropped, sports shut down, and casinos closed speculation began that people were looking for something to try and the market provided that opportunity. John Cassidy of The New Yorker detailed an enounter he had with someone at a public golf course who legitmately just needed something to fill his free time.
Instability in the Bond market has also seen more investors consider dividend paying stocks as an alternative. As the Federal Reserve continues to adapt policy on seemingly a weekly basis and corporate revenues continue to be impacted by Covid-19 investors have taken to other investment opportunities.
One of the biggest pieces of Covid-19 related news was the announcement of Phase 3 Clinical trials of Remdesivir. As the race towards medical treatments and possible cures for this virus heats up this is something a number of investors will be keeping an eye on as the year progresses.
IS THIS SUSTAINABLE?
That is the most critical question that no one can give a definitive answer to given the volatile nature of the markets. Record unemployment claims and long term economic uncertainty would certainly serve as indicators that the market could have reached overvalued territory. In the same article we mentioned earlier from The New Yorker John Cassidy discussed his own concerns about the perception and possibility of a "v shaped recovery". His concerns were mirrored by Rob Isbitts, a contributor at Forbes. Isbitts analyzed Bear Markets and their technical indicators throughout history in a quest for anything that could help people understand these bizarre market conditions. While historical data in no way guarantees present day or future performance, he recommended a cautious and attentive approach to the current market conditions. Things are changing so much every day the best thing we can do is try to pay as much attention as possible and exercise patience as we navigate these uncertain times together.