Here is a shot of the S&P on Feb 19 when the market peaked at 3393 intraday.
Here is a shot of the local market low on 3/23 of 2191 intraday
Here is a shot of Friday’s chart with an intra day high of 3049
Indexes are designed to go up. Indexes because of their design do not represent some intrinsic value associated with some intrinsic risk. Instead they represent a market elevator of unknown value and unknown risk. Passive investing is simply a on off switch. You pay some money and turn risk on or you cash out and turn risk off. The buy and hold passive crowd neither knows the risk they hold, nor do they ever turn the risk off. It’s risk on all the time. The risk however does vary over time. At market peak on Feb 19 here was the VIX 10.20
On March 18 it topped out at 86.76 with the resulting market low 5 days later. That’s 8.5 times the Feb 19 level
On Friday it topped out at 27.51, 2.69 times the Feb 19 level.
Since risk is what you own. Is something 269% above the Feb 19 level a high level of risk?
I was listening to a podcast breaking down the makeup of the S&P in comparison to the MSCI. They broke down the S&P with and without FAANG plus MS in the comparison using the Friday 3044 level. The expected level of the S&P 500 minus the FAANG + MS was about 2400 meaning without the FAANG+MS the S&P is up only 209 points above the March low. Over 600 S&P points are due to 6 stocks, the FAANG+MS. Only 200 points are due to the remaining 494 stocks, and the volatility is still +269%.
40.77M jobs lost. Let’s say when all is said and done 15M go back to work leaving 25M unemployed. Do you think if you left a 100K/yr job you are going back to a 100K/yr job? What if some joker will do that job for 50K? What happens to market risk if the job you go back to pays 50K less, meaning you will be severely limited in your purchasing power. No brand new F-150’s for you. Maybe no college for Junior.
The FOMO machine s basing everything on 6 companies and every Robinhoodie out there is plowing his stimulus check in the 6 FAANGS. You can make money on the way up and you can make money on the way down. It’s buy low sell high or sell high buy low (short sale). Either one will make you a ton of money. If you buy higher and then hold, in a market with 269% excessive risk what could possibly go wrong?. You can’t short an IRA or a Roth. The algorithms live to make profit and they make it selling high buying low just as easily as they do buying low selling high. The whole time the talking heads are selling you on a V shaped recovery because they know you have sucker stamped on your forehead. Your very mantra has sucker stamped all over it “buy higher never sell”. What buy higher never sell means is you constantly accumulate more and more risk. Sometime you might ask the question how much risk is enough risk to own?