SA: From bubble to bust

I suppose this goes without saying, but there’s still a palpable sense of incredulity among many market participants about what, exactly, happened last week.

A long time ago (in a galaxy far, far away), I mentioned that despite readers’ insistence on branding me with this or that “bear” label, history will show that, when push comes to shove, I will in fact be one of the few people not panicking when things get dicey.

It’s true that I have some rudimentary Photoshop skills which I employ in the service of creating compelling banner images for some of my various musings elsewhere, and it’s also true that, during times like these, one cannot reasonably be expected to avoid indulging in some hyperbole when it comes to choosing titles for posts.

But, flashy visuals and headlines aside, anyone who has followed the substance of the dozens upon dozens of missives I penned during this week’s high drama will tell you that my analysis has been the very definition of trenchant.

I would argue that, when things are happening that the general investing public does not fully understand, there is no better cure for panic than trenchant analysis. People fear what they don’t understand. My work this week helped folks understand how it is that US equities managed to fall from record highs into correction territory in the space of just six days.

Obviously, the proximate cause of the consternation is the coronavirus, and the headlines in that regard got materially worse on Friday evening and Saturday morning. The US, for example, reported its first death from the virus in Washington State.

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