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We talk about how the market is forward seeing. That the price or value that the market is at is what people are predicting is going to happen in the future.  Let’s dig in.

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Episode 025 – April 29 2020

Rick Zich:          This is Market Insights from Southwest Investments, where we dig into current events and how they affect the markets, but also how they might impact your financial future.

 

                        Welcome to Market Insights from Southwest Investments. I’m your host, Rich Zich. I’m an advisor here, and joining me is the president of Southwest Investments Bart Schannep. Bart, welcome to the show.

 

Bart Schannep:  Thank you. Glad to be here.

 

Rick:                     We have been getting calls for the past six weeks about what is happening to the market, what is it going to do? Obviously, that’s always a question from advisor, from clients to advisors, but we have been seeing some market strength. Why is that the case? Let’s dig into some of those details.

 

Bart:                     First of all, let’s look at the cause. The market obviously went down because of the virus, or more specifically, the government ordering the shutdown of business across the board. What that has done is, its, we had a lot of fear with the virus when it first came out, right? We didn’t know what it was, how come it’s killing people, there’s no vaccine, there’s no protection, there’s no treatment. TI mean, this all sounds really bad.

 

Rick:                 Yeah.

 

Bart:                 The market cratered on not knowing how bad this was going to be.

 

Rick:                 That’s right.

 

Bart:                 Well, the news has not gotten any better, but what it’s doing is it’s getting less bad all the time. The stock market, which is a forward-seeing eye, realizes that this problem it’s a permanent situation. The virus will pass.

 

Rick:                 Yeah, and just to go back, I mean, we had market highs, the highest points in February.

 

Bart:                 Early, yeah, early to mid-February the markets were at record highs, and in such a short period of time, by March 23rd, the Dow was down 37 percent, and the S & P 500 was down 34 percent. Well, since then, even though news is still bad, it’s getting less bad all the time, and the market has been rising because it sees that not only is the news less bad, it’s going to be getting good at some point, and that’s what the market knows. Sure enough, we are currently, on the Dow, up 33 percent from that low point. On the S & P 500, up 32 percent. OK, essentially the same. Now, we’re still down from the highs. You know, if you go down 37 percent, you’ve got to go up more than 37 to get back to even, but the market is slowly. Well, actually, I shouldn’t say that. The market is pretty quickly getting back there. I mean, here we are, April 23rd, it’s moving along quite nicely.

 

Rick:                 Absolutely, absolutely. Well, thank you so much Bart for that insight, and thank you joining us this week .We would look forward to seeing you next week. Thank you so much.