2020 STOCK MARKET OUTLOOK

I'm reprinting, herein, the economic commentary that I sent to my stock investors/subscribers today, April 17, 2020. It's an excerpt from a daily report on some stocks that we're following and a list of trading ideas. I'm posting it here on LinkedIn, because I'm incredibly alarmed at the number of people who cannot foresee the economic downturn that is about to permeate the globe. I figure if I try to spell it out as clearly as possible, it will dawn on people that their unemployed and underemployed friends and neighbors are not going to fare well this year, and many will suffer for several years to come.

2020 STOCK MARKET OUTLOOK

"The S&P 500 index appears to be starting a new run-up, with short-term price resistance around 3,100.

Please expect volatility, and that definitely includes periodic large market pullbacks. I’m not just saying that as a standard disclaimer. There’s a certain amount of irrational exuberance that’s taking place now. People are not comprehending how badly the private sector has been hurt by the global economic shutdown. Everyone from farmers to florists, retailers to salespeople, and almost every person involved in the entertainment and travel industries will be living on far less income, possibly for years to come. I’m not trying to sound alarmist … I’m trying to be realistic. Many of these people will not have their old jobs back and/or won’t be able to live on the reduced income. Out of necessity, some will sell their primary residences in order to live a less costly lifestyle and gain access to their remaining home equity. This new home-selling trend will lower home prices across the U.S.

Again, I’m not being alarmist. This is just plain logic. Pick ONE family you know who until recently managed or owned a restaurant or small retail store, for example. Ask them if they will need to spend significant savings or take on a lot of debt in order to reopen their business and survive until the economy gets strong again. Listen to their answers. Then imagine that taking place in millions of American families.

Local and state governments are comprehending that when people are out of work, they’re not generating tax revenue, which pays for their employees. I’ve already read of instances in my state, Colorado, where governments are furloughing workers.

So yes, the stock market is happy right now and there’s money to be made, and I will hand you trading opportunities on a silver platter. But please don’t confuse temporary bullishness in the stock market with the idea that “the economy is returning to normal.” No. The economy has been very close to “mortally wounded.” Reach out to your friends and relatives who may have lost employment. They’re completely panicked. If you acknowledge their distress, it opens the door for them to share their fears, and possibly brainstorm with you about how they will find a way to pay their bills until they find a new job. It will be like therapy … because they don’t have money for counseling appointments.

Thanks for listening. Obviously, I’m extremely concerned for this unprecedented burden on families."