The Sick Market

More About | COVID-19 | Wealth Management

When a market reaction is as violent as the current one, it is always due to fear. More specifically, fear of the unknown. Having no idea what will occur tomorrow, much less the next several weeks, months or years in the future, allows human emotions and psyches to run rampant and envision the absolute worst possible situation.

The last big bear market, for example, scared the daylights out of most investors. If you care to remember: Lehman Brothers went out of business, AAA-rated mortgage backed bonds defaulted overnight, and money market funds were set to freeze their assets until the US government stepped in. None of those things had happened before, and fear of the unknown helped generate the deepest bear market in most of our lifetimes. That bear market bottomed in March of 2009, and two years later, 60/40 portfolios climbed to new all-time highs. 

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