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The Market Was Right Again - The V-Shaped Recovery In The Economy Is Here



  • The market has been predicting a V-shaped recovery in the economy.
  • The market is one of the best leading indicators of the economy.
  • The blowout jobs report on Friday confirms that the market was right again.
  • Where do we go from here?
  • What are the risks?
  • Looking for a helping hand in the market? Members of Best Stocks Now! Premium get exclusive ideas and guidance to navigate any climate. Get started today »

Five weeks ago, I told Seeking Alpha readers to get ready for a V-shaped recovery in the U.S. economy. If you missed my article at that time, you can check it out here. In the article, I made the case that the market bottomed on March 23 of this year. I predicted this bottom for my subscribers and followers in my article on March 19. If you don’t believe me, you can check out that article here.

The S&P 500 is now up 32.6% since that article. I also called a bottom in Boeing (BA) in that same article. Boeing is now up 94.5% since then.

In my most recent article, I disclosed one of the rules that I have learned to live by during my 23 years as a professional money manager and analyst. This rule is most relevant today in an extremely divided world, where many headlines on both sides seem to have an agenda. Here are some rules of the road I continue to practice:

Rule Number One

The market is not going to do what you want it to do. You cannot invest in your opinion, your bias, or in the headlines that you agree with.

I have mentioned before that the doomsday headlines were not based on facts. What facts did I have that they did not? Two very important ones were left out. First: here's a reminder of the second rule that I follow as it pertains to the market.

Rule Number Two

You will get a lot better feel for the market by looking at 100 one-year charts than you will from reading 100 headlines.

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This article was written by

Bill Gunderson profile picture

Bill Gunderson is CEO and Chief Market Strategist at Gunderson Capital. He is a professional money manager, former research analyst, author, and media personality with over 24 years of experience.

He runs the investing group Best Stocks Now! Premium. The group offers users: daily commentary and forecasts for the markets, live buy and sell signals, 4 portfolios, a daily 45-minute show, a weekly in-depth market newsletter, full access to the Best Stocks Now App that Bill invented, and chat for discussion and direct access to Bill for questions. Learn More.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). 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 (173)

Oops...This didn’t age well
GameBuzz profile picture
Make sure you read the follow-up--seekingalpha.com/...
@GameBuzz time to hedge gains after a huge decline? Probably not good advice after the fact, the time to hedge was the day he wrote his V shaped recovery...
GameBuzz profile picture
@Kingstocktrader224 I don’t subscribe to his service so I don’t know what the exact timing was; only showing the sentiment change.
I’m just glad I had some nice puts to help this week, lol. We’ll probably fill the gap this week or next before dropping again (if history/seasonality play out of course).
Binary all-or-nothing bets are best suited for roulette.
22 Jun. 2020
I disagree with Bill's conclusions. I believe their's serious underlying damage done to the economy. Many big names (e.g. Ray Dalio, Buffet, Town, etc) seem to believe so as well. Bill can also come across as arrogant.

BUT - I cannot help but admire a man who makes bold calls in real time, articulates his reasoning and ends up being right as well. It takes courage to think that way, let alone to publish that opinion in an article against the massive tide of pessimism in mid-March.

I was (and still am) of the opinion the market is overpriced. But I have nothing but respect for Bill who in my opinion is not cocky or arrogant; but rather pointing to real time calls he made while naysayers were berating him. So far I've been wrong on this one and Bill's been right.
Big Game James profile picture
I agree. I can see how some might view Bill as cocky or arrogant, and devote a lot of time and effort futilely trying to prove him wrong. But after listening to his podcast, I see it more as him having a little bit of fun with his many detractors. He obviously delivers tangible results, just like many other investment professionals. His way is not the only way. But it works for him. Just like Uncle Warren's method works for him and Charlie. And Jim Simon's quant trading worked for Renaissance.

With regard to further market damage due to COVID-19, unemployment insurance running out, ballooning debt, protests, the election, etc., the one thing that most bears and doomsayers seem to forget is; there are only so many places institutional investors and hedge fund managers can put their money. Especially with bonds paying next to nothing. So even after devastating market selloffs, that money will eventually find its way back into the stock market. Like it or not.
23 Jun. 2020
Excellent point, money has to be put to work somehow. Stock market only game worth playing right now
David Haggith profile picture
@Maithem Mahdi You should have stayed with being right. Bill was dead wrong. The economic recovery has continued to lose steam, falling far short of a full "V." The market put in a "V," but not the economy. As you wrote above, the economy sustained serious underlying damage. It will be a long time before it recovers, and now the stock market is, again, catching down to the economy because the stock market rallied far higher than what the economy did.

I've been writing, since May, that the stock market would rally hard because reopening of the economy would create a burst of activity that would make it APPEAR the economy was having a V-shaped recovery; BUT I wrote repeatedly that you will know it is not a V-shaped ECONOMIC recovery by mid-July when the economic recovery will start to stall well below where the economy was at the beginning of the year. You'll only know how bad the economic damage is when you see how much did NOT quickly recover because it is completely broken (as in out of business) so is not ever going to recover.

New businesses will have to emerge to replace the many that have closed for good in order for the overall economy to even get back to where it was at the start of the year. That will take a long time, especially for restaurants and any form of brick-and-mortar retail, as new businesses are not inclined to even TRY to develop in down times such as these.

So, you only know what the damage from the storm is after the storm is over and the dust settles so you can see how much was damaged. That, I wrote repeatedly (against the popular narrative that nearly everyone else was writing about here on SA), would START to become apparent around mid-July and would NOT start to effect the stock market until August or September, maybe even not until October, because it would take awhile for the obvious economic failure to start cracking through the market's intense denial. Denial was made resolute during the initial months of reopening, which I said would cement that opinion with a huge boom. (But booms go bust.)

After all, this is the first time in history we had a collapse triggered by intentionally turning off circuit breakers all over the world where we could simply flip all the breakers back on all over the world to restart the economy. The tell-all only comes when you see what happens AFTER you flip all the breakers back on and then look around to see how much DIDN'T restart or how much is smoking badly due to how it broke when shut down.

We are there. That is what happens whenever you do a factory-wide shutdown of a large plant and then try to restart. Even more so when it is nationwide shutdown. Even more so when it is a worldwide shutdown. Many things simply do not restart as easily as they were shut down.

Thus, we have had three down weeks in a row in the market as it comes to grips with how much did N0T restart, beginning with the week that began on the last day of August and continuing EVERY week in September. We are FAR from a V-shaped economic recovery; so, now the market WILL catch down to that reality because it was priced up far beyond anything a recover could deliver even if it did happen and all based on nothing but vain fantasy.
TM4K profile picture
Bill you are right! Let all the bears out there keep shorting and get burned! With 5 trillion on sidelines and 0% interest rates Stock market only game in town! Long QQQ and TQQQ
Your article may have been the top lol

I buy most dips either way tho so I bought today
muscles10 profile picture
who came back here after today's 7% correction - need this author to be wrong for being so cocky.
David Haggith profile picture
@muscles10 Just got his behind smacked by Powell, who made it clear the Fed fully believes many average Joe's won't see their jobs back for YEARS. As I wrote in my last article, those job gains of the the last reports created a false impression. Dig deeper, and you find the job gains are a mere trickle ... a 10% recovery. As Powell said, full recovery of the Job market won't happen until 2022 at best. (His words.)
I came back.

Quote from his May 7 article - "I'm really not an arrogant kind of guy."

People who know with certainty that they are truly not arrogant and not perceived as such don't really need to state the obvious.

Authors and "gurus" who pontificate in this guy's usual tone are REALLY loud when they are right, and get really quiet (especially in the comments sections) when they are nervous when market conditions turn and begin to indicate that the message they have been screaming through their bullhorn for months on end may not be 100% right.

I really want to like Bill, because I think he's a very smart and astute guy in many ways. But the abrasiveness and cockiness of his style on SA makes me think that he's just not a guy I'd like to sit down and have a beer with. Truly a shame.

If he's wrong about this perfect and uninterrupted "V-Shaped" recovery he's been consistently pumping (and I'm not saying he is...too early to tell at this point), it will be very interesting to see if will man up and admit to being wrong, or just posture again with how brilliant a move he made by "putting his defense on the field" on 6/10/20 in an amazingly prescient and perfectly-timed move.
David Haggith profile picture
@A Pitts

He's absolutely wrong about a V-shaped recovery, and that's easy to figure out if people just take off their blinders and stop thinking through their politics or through their wishes. He, in fact, could not be MORE wrong! Look at what we face:

Actual business was in longterm decline for the past two years. Forget "earning." They are meaningless because they are faked up by stock-buybacks that have NOTHING to do with how BUSINESS is actually doing. They were mostly bought on piled up debt, which actually weakened business when it comes time to face tough times like this because many businesses now have no more debt capacity to get them through this hollow spot. That was all-out greedy and stupid. Now we are bailing out those businesses that used all their reserve capacity to enrich themselves, rather than to lay in for a long, freezing winter.

Regardless of the profligacy in terms of stock buybacks, business was terrible! Manufacturing went into recession last summer. Services started to slip into recession in the fall. The financial industry was caught in a whirlwind that showed up as repo crisis. It was a very unhealthy environment BEFORE COVID-19 hit.

The retail apocalypse had been going on for about three years and was getting slowly worse. Now all the weak players have been jolted out of business. They will not reopen. Those jobs will come back. Others that were weak open weaker still and have to face diminished foot traffic, so many of them will die off even if COVID-19 doesn't make a fall comeback, which it is most likely to do. All summer events in many regions have been cancelled by regional governmental decree. That will make for a terrible summer business period, as those huge events bring in all kinds of commerce that won't happen. That means summer employment will be down and local tax revenues will be terrible all summer long. By the end of summer (or earlier) severely tax-strapped governments will be downsizing a lot, and that means more unemployment.

Do the math. Run the numbers. Stop pretending. Business is, as J Powell said not going to return to where it was for, AT LEAST, two years. And that is optimistic, as in if we all weather though this as good as can possibly be hoped. Add to that all the social turmoil and destruction that will keep people away from areas under turmoil and shut down businesses during the reopening that are in those areas.

This is a full-blown disaster, and we'll do best by not pretending otherwise but making prudent moves to work though it. There is ZERO hope of a V-shaped recovery. We'll be lucky to have a square-root shaped recovery, and this write has merely mistaken the "V" at the front of a square-root sign as the sign of a full "V" to come. It's going to look more like a backward checkmark -- A very short leg on the return side of the "V." From there it is back down again, and it becomes time for major reforms.
All lie. No V shaped recovery here. Double bottom is coming dont be fooled.
David Haggith profile picture
@OpelKadett Definitely! Even worse. And the true bottom will take years, not weeks or months to be found. Powell finally said as much yesterday, contradicting everything this article claims.
GameBuzz profile picture
Not on my charts!
David Haggith profile picture
Get new charts!
not so fast Gundy.
Powell probably knows a LOT more than most about if we are going
to have a V shaped recovery. sounds like ANY recovery would be
good as far as he is concerned.
this is ANOTHER LEVEL of "don't fight the Fed".
David Haggith profile picture
@frogmaier Agreed ... kind of. While I wouldn't agree that Powell knows anything, he certainly agreed with what I've been saying for months now in my own writing, even before the big crash hit. He now recognizes that in hindsight. He agrees, based on what he sees, that this economic collapse is going to take YEARS, not weeks or months to play out. He said that very clearly, and I think that broke through some of the market's denial, too -- hearing that from the Great Guru.

So, a jolt of awakening from the Fed timed with a jolt of reality from the return of COVID-19 woke the sleepers up. I fully expected COVID-19 to make a big comeback; so I made that event the stop for my own recent trades and got right back out as soon as the news hit last night.
11 Jun. 2020
I will take a page from Elon today.

No brains in the market, just greed ! The “V” is in trouble
David Haggith profile picture
Thank you, @Captain Oblivious . I've been writing the same thing with an article titled to say as much.
David Haggith profile picture
Oh please!

This is the most pathetic excuse of a V-shaped recovery ever. Have you not noticed that checkmark is shaped like a "V" at the bottom. Turn that around and you have this V-shaped recovery -- a very long leg on one side and a tiny one on the other. This so-called blow-out job report recovery less than 10% of the total jobs lost during the Coronacrisis. The next one will be better, but we will remain far below the total number of jobs costs for year, not month. The knock-on effects of the shutdown haven't even begun to show up yet, and there will be as LOT of them, staring soon. A lot!

Your little backward checkmark of a recovery will last one or two months as things jolt back up from reopening; but wait until you see how much never reopens. What does reopen can open fast. What DOESN'T reopen will only become apparent over months as we see what point the bounce back up stalls at. The distance that remains to be travelled is all that didn't reopen.

You're either kidding yourself or selling snake oil.
Well, oil.
GameBuzz profile picture
Pretty sad when another contributor has to resort to urinating on another contributor’s article. Bad form and unprofessional. Especially the puerile condescension. Not the best way to drum up an audience.
Big Game James profile picture
@GameBuzz -- Well said. There is no need for ANY contributor to knock, denigrate, or troll a fellow contributor. It only makes them look lame and weak. There's plenty of room for differing opinions just as there are numerous ways to invest or trade.
cliffecon profile picture
"The V-shaped recovery is here!" As with all such predictions, I'd like to see the authors commit to re-printing their prediction 6 months from now and see how good their prediction was. I read one in late February/early March where one guy said, "By June, this whole coronavirus thing will be in the rear-view mirror." Well, it's June and the latest forecasts for 2020 GDP are negative (for the U.S. and the world), there's 20 million unemployed, the IMF forecasts it'll be years before the economies of the world recover, and the government has provided $6 trillion of debt-financed stimulus (with more to come). Some rear-view mirror! I'm not foolish enough to make a bold prediction of the path forward, especially since we don't know when (if) a vaccine is in the offing...but I do think those who make such bold predictions, especially citing one small data point, should report their results at some point down the road.
Question for author -
If market is forward looking and moves on earnings expectations, according to your chart next year EPS is 160, why did it fall 35% in the first place?
Illuminati Investments profile picture
Next year's EPS is ALWAYS overstated. It usually comes down at least 10% even in years where there's not a pandemic.
Rombo profile picture
@Bill Gunderson makes pessimists heads explode. Its kinda funny to watch. My investments have V-Shaped! I bought heavy on the worst day of the year (March 19th)... happens to be right before Bill's "bottom is in" article. He seems to have called it as far as I can tell.
Unfortunately not everything follows your rules. Take ULTA for example. They were expected to make .44 eps but instead did -1.12, and what did their stock do? It went up. Its price is now higher than it was when they were actually making money! There are many examples of this in this market and it simply doesn't make sense even with your rules.
What a great article. Thanks Bill
I have a feeling this may be an inverted ‘N’ Curve i.e. ‘и’
The government cannot pay people
Not to fire people
Forever bill
@Bill Gunderson

Wrong. You missed it by about a football field. We may or may not be on the right side of things with Covid-19 but we are just in the beginnings of the economic crisis. When the unemployment rate drops to 6%, which is still quite a ways from 3.5% where it was at, then the economic crisis will be judged as being over. As history goes, we are probably a few years away (more like 5-10) from seeing 6% unemployment again.

Every time this country goes through an economic crisis, it takes longer for it to recover due to our weakening manufacturing industry. When companies let people go due to a shock, they are not quick to rehire everyone. Most try and get the most efficiency of the employees they retained, then they hire only who they need to hire. If you have ever run an enterprise, you would understand this. Generally speaking it is mostly goods based providers and manufacturing who tend to hire back employees the quickest. With manufacturing continuing to decline in this country it makes for a tough situation. It took 10 years for employment to recover from the 2008 crisis, I don't see it being any different in this situation. This time around we have a demand shock, a supply shock, a health crisis, and a consumer fear crisis, all with 20 million people unemployed. I sincerely hope that most of the 20 million people get thier jobs back, but I am not holding my breath. Bankruptcies are just getting going and it will take a year to get through that cycle, to get the winners and losers, those who ultimately can survive the crisis and those who can't. There are likely still a lot of currently employed people who may very well still lose thier job.

Watch Visa, Mastercard, and American Express for restored spending and ADP for unemployment. They are less apt to screw up the numbers vs what the Fed reports. So far the numbers have been nothing but scary. You can watch Ford, Tesla, GM, Toyota, and VW for the major headlines in auto sales. Take a look at the numbers, when they have recovered to pre-Covid-19 vehicle sales, these manufacturers will be quick point it out. So far, the numbers are nothing better than a complete disaster.

Lastly, if you want to write fairytails, maybe you should consider writing children's books. It can be quite rewarding.
You might need to take another look at rule #1
GameBuzz profile picture
@FireSharp Yes, SA is full of them. It’s like yelling at the sun to stop shining because it’s supposed to storm.
David Haggith profile picture
@mahagen Well said. It boggles the mind when one thinks about how people cannot see or will not see the obvious knock-on effects that are going to come from this or don't see that, of course, the reopening gives a rapid jolt up, but it will not make up for the tumble for a VERY long time.
There will be no V shaped recovery in the economy. We have not even begun to feel the ripple effects. We are involved in the world of sports, just one example of high paying jobs not coming back. For years the USTA paid coaches and administrators $100000-$600000/year. They have gutted entire programs the past 2 months, let go hundreds of highly paid people. College sports have cut tennis, hockey, softball and many others. Many highly paid coaching jobs gone forever. And those people will never find a way to make $250000 for coaching kids ever again. Same with lots of junior sports physical training programs, closed and never coming back. Just the world of sports training and coaching will see tons of high paying jobs gone forever. Along with benefits gone.

Our city went on a spending spree the past 7 years. Building new facilities, hiring multiple guys just to ride around the parks picking up branches. Hiring administrators for every program and paying them well with benefits. They are all gone now, just a small skeleton crew left to do the jobs of about 5 guys each. None of those jobs are coming back as municipalities struggle to balance their budgets.

The ripple effect is just getting wound up. So many highly paid jobs with benefits have vanished and will continue to vanish over the next 6 months. Folks who were making $120,000 for jobs now gone will be taking jobs in restaurants.

This deal is just winding up. And if there is ever a 2nd wave in the colder months, who knows where we end up.
David Haggith profile picture
@powercise So correct.

The damage from this has not even BEGUN to be felt. Think of what happens when all those stadiums still paying loans all default because no one wants to be that close to masses of other people in flu season when the big season for football begins and then basketball. What happens at baseball stadiums this summer. Those businesses are devastated, and what does it mean for all the businesses around those stadiums that depend on that foot traffic. WE HAVE A FULL SUMMER OF THAT TO LOOK FOWARD TO, even if everything does open back up by fall.

In my community ALL summer events have been cancelled by county decree. No county fair, no tractor pull, no Fourth of July, etc. What does that do for summer business? What does it do for Summer tax revenue! What happens when governments start massive layoffs because their tax hit was so bad and they cannot print money like the Federal government can through its agent, the Fed?

Then what happens when all these laid-off people start defaulting on their mortgages and the business that didn't open result in malls defaulting on their mortgages? It just goes on and on. To think it won't is to live in peak denial.

That people cannot see this coming is just mind boggling to me. That's why I just wrote my own article about "I Believe in the Stupidity of the Market!" This is without a doubt the biggest, most irrational disconnect in market history.
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