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Stay Calm And - Buy

Erich Reimer profile picture
Erich Reimer


  • Coronavirus and the oil price shock are wreaking havoc on markets and causing the steepest declines and greatest volatility since the 2008 financial crisis.
  • I believe some of the fear is justified as previous, overly optimistic projections are being brought down to Earth and revised even further downward to account for these new risks.
  • By summer, I think we will have a clearer idea of the progress made in combating coronavirus and thus whether it will have a coercive impact on the mega economies.
  • Oil price disruptions have been survived already this past decade and there are signs that this turn of events may be temporary, as it is more geopolitical battle than economic development.
  • Amid all the red, there are increasingly a lot of interesting buying opportunities out there as markets return to justified - and even cheap in some cases - valuations.

Wow, do markets move fast in the day of smartphones, zero-fee commissions, and high-speed traders?

Who'd have thought back in the ancient times of February 12, 2020, when the Dow Jones Industrial Average (DJI) had just made a record close of 29,551, that we'd now be experiencing day after day of increasingly steep drops and gains (but mostly drops) now culminating, perhaps, in 2020's "Black Monday" of a Dow down over 2,000 points?

Amid this historic volatility (VXX), my message is - stay calm and maybe even buy a little.

Coronavirus and oil are largely separate from one another but both impactful on their own and, when combined in a one-two, a devastating attempt at a knockout punch to this 11-year bull market. I think the market was due for a correction at the relatively rich and overly optimistic valuation levels it was at. However, when looking at valuations now - things seem almost a bit cheap from a forward perspective.

(Source: The Wall Street Journal)

The fact is that economic growth both domestically and worldwide is not in recession territory, at least beyond a potential momentary blip from coronavirus quarantines, even if it is slowing. Revised U.S. 2020 economic growth projections are down to 1.4%, a significant slowdown from 2019's 2.3%. China, which seems to have largely recovered from the virus, is seeing growth expectations of around 5% and down from its consistent 6% levels. Other regions, such as India, an already-slowing Europe, otherwise seem likely to experience similarly. These primarily come from a combination of economic growth that already seemed strained even at the turn of this new year and now compounded greatly by the coronavirus and oil price shock.

Yet I believe the systematic medium and long-term risk remains low even if it is

This article was written by

Erich Reimer profile picture
I primarily write on cryptocurrencies and other frontier technology topics. I hosted "Tech Investment Insights" here at Seeking Alpha, exploring emerging technologies with some of the world's most innovative corporate leaders and entrepreneurs. My professional background is in public policy, financial regulation, and the business side of the technology sector. I'm a licensed lawyer in the District of Columbia and the State of New York. I earned my Bachelor's degree from the University of Pennsylvania, to include training at Wharton, and my law degree from the University of Virginia.

Analyst’s Disclosure: I am/we are long XLF, XLF, SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (12)

ARG1 profile picture
You should always buy in a bear market.
Mark BM profile picture
"there are increasingly a lot of interesting buying opportunities out there as markets return to justified - and even cheap in some cases - valuations"............

then you read the article, and the author doesn't list his picks....
ARG1 profile picture

At these valuations I think it is not to hard to find good deals. Pick out stocks that have a minimum yield of 3.5%. Look at the DOW 30 stocks for a beginning. For a beginner for you I like UPS, MMM. and IBM.
ARG1 profile picture
Totally agree. I am buying stocks. This is when you buy stock of great companies with good dividends. Buying a 10 year treasury at 0.70 interest is stupid.
Amen. After 10 years you get your money back which, adjusted for inflation is 80¢ on the dollar. You likely made about $7 over that time, taxed at a total average of 30% so you kept less than half of one percent per year.

Or, one could stay in cash until feeling ready to invest. The worst thing somebody could do would be panic and sell.
Spitfire MK V profile picture
The solution to everything , keep buying , the greater fool theory , sounds like a solid retirement strategy .
Passive investors ignored the signs of slowly GDP, always thinking if the markets keep rising the economy must be doing great. Now consumer spending which accounts for ~70% of growth stops on suddenly there will be no effects to send the markets lower. Think again.
"Wow, do markets move fast in the day of smartphones, zero-fee commissions, and high-speed traders?"

You nailed it right there. The new paradigm is upon us. This is a lesson in how rapidly markets can unravel based upon the new level of electronic mania.
be patient and don't buy or sell. Wait till April after earnings and see where the trend is moving. Don't time the bottom but ride the wave going up.
If you are a growth investor. I am picking up dividend payers at multi annual lows slowly.
most of the high quality dividend stocks specially the aristocrat are still over valued treading at 25x pe.
Yes. Most are.
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