Trade The Journey

Trade The Journey

A little fear, A little Optimism, and A lot of Caution

Greetings, I hope all is well; everyone is healthy and in good spirits.

Sheltering at home can bring about many feelings. Isolation, Loneliness, and depression are just some of the emotions people around the world are experiencing.

You could also say that some have used this period for rejuvenation, recentering, and relaxation. I guess you could say this a glass-half-full or half-empty situation.

I want to think that I’ve experienced all of the feelings listed above in varying degrees. No one could have imagined the effect the Coronavirus would have on our lifestyles and the economy. Some say the damage is only beginning, its recognition prolonged by government intervention.

 

Predictions, in challenging times, become a form of currency.

I’m sure you’ve seen the ads or Facebook posts featuring someone who successfully predicted the 2008 crisis. Or the consummate pessimist who predicted that a downturn would occur in the immediate future. Interestingly enough, these pessimists never give an exact date, only general predictions covering a wide-range of time.

Once in the longest bull run in history, the US economy is on the edge of destruction. In times like these, a prediction or forecast can come from different sources. Perhaps we’re at work and hear a tip about the latest investment that protects against losses. Most often, you hear the theories of doom and gloom.

Sometimes I look at the stock market, and I become intensely confused. The data, climate, and outlook given by respected economists remain grim, yet the stock market continues to climb back from its losses.

The current opinion is the stock market has discounted or factored in the effects of the Coronavirus and priced in recovery because states are reopening.

The IMF released its world outlook for the coming year, and the word “Depression” appeared several times within its latest report. It’s hard to imagine that we might be entering a depression. A recession I can accept and imagine because I lived through the 2008 financial crisis.

I remember how the crisis affected me personally. Around the time the economy tanked, I was graduating from college. I was eager to make my dreams come true, but entering the workforce resembled more of a nightmare.

There were very few jobs in the city I resided in, and the available jobs went to the most experienced. I was displaced and disappointed, blaming myself for my lack of employment and success.

 

“This time it’s different.”

This phrase is used amid a great bull run and in the perceived permanence of a bear market. In history, we can find events that parallel the events we are currently experiencing. For example, during the Spanish Flu, the government downplayed the threat of the Spanish Flu until it became widespread.

People lined the streets to protest the safety measures, labeling the measures as an attack on personal freedoms. Everyone relaxed their guard, allowing the Flu to regain its momentum until the safety measures became mandatory.

Once again, we are in the same predicament over 100 years later. The only difference is the fragile economic environment we find ourselves in. Countries around the world are implementing protectionist measures and rerouting their supply chain from China.

The global economy that once ran with few significant issues suddenly finds itself in the ultimate dilemma. The trust that once underlined the deals that kept the economy together now faces the threat of destruction.

 

Can countries survive on their own with few imports to depend on and even fewer exports to other countries?

The prevailing sentiment among the general public seems to be anxiety and hope for a return to normalcy. So I have to ask what is proper the forecast for one to have?

Currently, we have no vaccine, and in the US, the testing began later than recommended. The CDC has cautioned against reopening to quickly.

Forecasting in times like these is difficult, if not impossible, because no one knows the Virus’s actual severity and lasting economic effects. Investments for the long-term should be made at this time with faith that the market will return at some point. However, I wouldn’t invest without knowing how the company intends on funding its resources and strategic outlook.

A beginner shouldn’t undertake trading, with the extreme volatility in the market. While it is true that profits will be taken from the market, retirements will also be lost.

So again, what is the proper forecast to have in these times of uncertainty?

I wish I could say, but maybe the proper forecast is to have none and keep a open mind. While it may seem foreign to you, to relinquish a prediction, it may be the only way to remain fluid. Projections often are attached to your ego, and it can be difficult changing an opinion once firmly held.

Remaining informed of the changing parts of the economy like the credit situation, reopening of the states, and countries around the world, among other factors, can provide some clues.

Most of the time, all we have is a clue and probability that the investment will prove successful.


Week in Review:
There will be challenging times ahead, much more than now. I’ve continued to limit my spending on discretionary items. Like most, I’ve grown tired of continually wearing a mask. I still wear it because it’s better to be safe than sorry. And the bigger question is why would you put your loved ones in harm’s way by not wearing a mask?

This week, I’d like to give myself a “C.” It may be a good idea to remain as liquid as you can. Invest, but keep a watchful eye on the economy.

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