Investing in a fear-driven market (Opportunity Alert!)
The recent correction in March was fear-based and not driven by macroeconomic or geopolitical factors. Reserve banks across the globe coordinated monetary policy to ensure a strong rebound from this crisis. Federal governments continue to use fiscal stimuli to ensure any contractions in individual economies are short-lived. This is not a financial crisis. This is an evolving economic crisis. The duration of this economic crisis will be dictated by the strength of the rebound in business activity driven by individual countries.
The current stock market offers a significant growth opportunity in 2020 but a future problem if the economic crisis has a slow recovery. To understand how the equities market will unfold for the rest of 2020 and into 2021 you need to understand the difference between the financial cycle and the economic cycle. Please watch my presentation below, in which I will define the difference in these two cycles and map out a way forward.