Circuit breakers trigger again on massive sell off that confirms a bear market. Shopping for bargains in this environment it akin to catching the proverbial falling knife!
This isn’t my first crisis. I’ve been playing to stock market since I was 13 years old. I’ve made big money and lost big money- all part of the learning curve. Later on in life I finally made it back so I had a decent retirement, only to lose it again in widespread fraud and poor oversight ( in utility stocks, a so-called safe haven for seasoned investors.)
Back then, PG&E went bankrupt as did a number of other energy companies (ENRON) because they got caught cooking the books or they were the victims of serious government meddling, PG&E was the latter. Lesson to be learned here was government rarely helps, but it sure can make things worse!
Fast forward to today, “U.S. stocks tumbled by more than 7% again Thursday, with Wall Street poised to extend its historically ugly sell-off, after President Donald Trump announced new plans intended to contain the human toll and economic impact of the worsening coronavirus outbreak that has whipsawed global markets.”
Okay, but the stock market was bloated long before corona virus went on sale in the wet market. Price to equity ratios (P/E – a good value indicator) were way out of whack, thanks to speculators jumping on the ol gravy train and pushing stocks into unchartered territory. Of course… sooner or later all good things must end, you just can’t reasonably expect to violate the laws of basic investing and not have a day of reckoning.
If it wasn’t Hunan flu it would be something else and that’s what we are seeing right now. The market is taking huge hits because it was overbought and now it’s approaching oversold.
The damage to cruise lines, airlines, hotels and the whole travel industry in general is obvious, but then there is the ripple effect and that’s not so clear. We just know that it’s going to be bad, the economy is about to take a big hit and that is why the market is in free fall. How bad it gets depends on how many lemmings run over the cliff. If you know the answer to that one, please tell us here so we will know when to buy bargain stocks. Till then, hang on to your wallet and get prepared for a wild ride.