The economy is in a borderline depression, but the money printer goes brrr, so Robinhood buys everything in sight. Maybe it’s different this time, and speculation completely unsupported by the facts or valuations, will turn out just fine.
Coronavirus is causing severe human suffering. The equity markets are also suffering. However, valuations were looking for a reason to correct. The stock market can easily drop another 25-35%. Use this correction to move away from “old economy” disrupted investments and move towards “smart everything” and alternative energy world investments.
In our annual forecast we suggested an early year correction driven by a volatility event. On Twitter in early January, I posted that coronavirus was the most important story developing. It is now threatening the stock market and global economy. Here’s a simple way to think about volatility now.