Well if someone thinks this is some form of an April Fool’s joke they have no real sense of humor.
We started the second quarter last week and jumped off a cliff.
We came close Friday to having to pause trading with the indexes down 5%.
We were able to erase most of the gains we had made since 2021 in a couple of weeks if not days.
There were analysts that were warning of another selloff like 1987, where the market had a bad Thursday and Friday and then fell through the floor for the largest one-day loss percentage wise.
It was at that point that market breakers were established to prevent market crashes.
It has gotten my attention for the first time in years.
I have been wrong thinking there would be a correction over the last two-plus years, only to have every pullback quickly erased and gains moving up.
We have had nothing but essentially positive movement in the markets since March 2020, with the onset of the pandemic.
With that said, we are now pushing the S&P 500 index down below the 5000 level.
The next real support is at 4700,
where we were in March 2020.
For those investors who sought shelter in Bitcoin, welcome to the party.
The crypto currency has moved back to around $76,000.
Most investors are still way ahead of the game, but some of this pullback could be due to margin calls on the equities that investors have now lost money.
This is where the real action has come from.
There are so many investors that have not seen anything but gains over the last five years.
A real correction will be a wakeup call and could stress the market beyond any technical measures.
What I find fascinating about the recent events are all the theories proffered on the public.
A friend went to an investing conference this weekend in Florida and came away with the theory that the tariffs were a way to pay down the debt and, with lower interest rates, this would alleviate the problem.
I do believe the President hates interest rates as a businessman.
What I do think is that there has to be a policy to pay down the debt.
The President absolutely believes that tariffs are a means.
Tariffs are essentially a consumption tax.
There is no way you will get politicians to pass higher taxes - a quick vehicle to the unemployment line.
You have to generate money some way to offset a cut in taxes.
The spending cuts are long past due but they do come with consequences.
What we will have to come to terms with is that we can’t afford all that we want and just taxing rich people is not the answer.
I had a friend bemoaning to me that his retirement portfolio was taking a hit, which was his way of suggesting the current administration was terrible.
I retorted that I was actually happy to see overvalued stocks come down where I might get to purchase them at more reasonable values.
Don’t overlook the fact that Warren Buffet has raised substantial amounts of cash over the last six to nine months.
I believe in Milton Friedman and the theory of a free market economy.
This concept that we are the richest country and can look past anything and everything is such fallacy.
I see little good in a trade war, but fair trade is essential.
We also have to learn to reel in our spending.
We will have to raise more money.
I have no problem with a consumption tax but I don’t buy that much.
There are no easy solutions to get this country to solve its debt situation.
The time for ignoring has passed.
