The US Stock Market Is Down 29%. Now What?

Who’s tired of me talking about bonds yet? I’m kind of getting tired of it. But corporate bonds are the real story, not stocks. Yes, stocks are down 29% (S&P500 Index). But bonds…damn!

Stocks are down because companies are not buying back their stocks anymore (remember share buybacks? Gone). Of course, that’s not the only reason. But behavior that was once considered normal and expected has come to a grinding halt, and share buybacks is one of those casualties. 

And then there’s people not buying those company’s products/services anymore because they are stuck in their homes. Toilet paper, yes. But Uber and Lyft rides? Zero. Peloton… yes? But Ann Taylor? And some of these companies have a lot of debt. So how are they gonna make their debt payments? 

They aren’t. And they are going to go right to chapter 7 bankruptcy. No reorganizing. Just a padlock on the door of Ann Taylor. And there you go. We are back to debt (read: bonds) again. Debt matters. Cash in the bank matters. Having good personal finance skills matter. 

I never talk about it but my training teaches amazing personal finance skills. Yes—to people over 50 that make six figures…everyone can always get better. You have to have those skills if you are going to do great in the markets, whether a trader or a longer-term investor. 

And so, as this virus moves through our towns and kills the weakest, it will do the same thing to weak business models and companies out there. 

Has there ever been a better time to get your financial house in order? In fact my training used to be called “Clean Your Financial House”. I called it that for a decade. 

As my nine year old told me yesterday, “Dad, it’s Spring. So I’m cleaning out everything I don’t use anymore.” What are you carrying around that you just don’t need anymore? If you are getting badly hurt then you are probably over-diversified. As just one example. It’s time people, clean your financial house.  

Here’s what I cover in this week’s video:

  1. Business models matter. I highlight a company that was left for dead but is now kick’n butt. They have a second chance to get it right. 
  2. We are going to see new companies emerge and some old companies come to life again. Google was nothing before they launched AdWords in the depths of the Dot Com Crash. We’ll see more “AdWords” this year. 
  3. The UK is taking a very different business approach to COVID-19 then the rest of the world. I examine what the stock market thinks about this business model.  
  4. People are getting hurt. And there’s one company that did $77bn in revenue last year that ruined the retirement of thousands of people. 
  5. What’s the best case scenario RC? Are we 1987? 2008? Something else?
  6. How long could recovery take?

When you are done watching, this is what you will take away:

  1. Why price beats even the best business models.
  2. Why exactly it’s going to get worse for some, but not all.
  3. Where will the US Government bailout go first? Hint: they won’t call it a bailout and it’s coming to your mailbox. 
  4. What the best case recovery looks like. 
  5. How long will the best case recovery take until lifetime highs again? 

All that and more. Right here. 

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