Some musings on the US stock market.

I’ve been mostly bullish since the early 2010s, not a raging bull, more of a cautious bull. I felt more bullish since 2016, as I felt Trump was good for stocks. If I’m honest it went further than I expected at the time. 1/12

Though we had sharp corrections, my sense was just that, they were corrections, which excessive leverage exacerbating them. As the bull extended I started to believe we could get into the lows 3000s. And reading some of the very respected analysts I follow, my sense was a 2/12

move to around 3300 might be where the market runs out of stream. Their calls were pretty good.

I suspected we might see a top around there, which may form over 2020. Again, not my call, I’m not that smart, rather an amalgamation of views of the smart people I follow. 3/12

The people I follow come from all backgrounds fundamental, technical, cyclical, perma-pull, perma-bear, etc. I hold opinions, though loosely, I like to view counter arguments and be flexible. Smart people are smart people, whether you agree with them or not. 4/12

Though bullish I considered the bull market as nearing maturity. Why?
1) It was long in the tooth. 2) Major economies were flirting with slowdowns/recessions.
3) Demographics, from what I read seemed to be turning down (though theres a strong counter argument too) 5/12

My sense was the that election this year may have made a full-blown bear market unlikely in 2020 however, I didn’t factor in a global pandemic. That said, the forces which I expected to resist a bear market by holding it off, have done their best to lead the fightback. 6/12

Where are we now?

There’s a never a simple path ahead, matters are complex & different paths emerge.

I’d be incredibly surprised to see the bull market continue or restart from where we are. I think the negative forces unleashed these past few weeks are too strong 7/12

Still, people say don’t fight the Fed, and the presidential election year is still a factor. This may support it and stop it from falling away (for now at least). I consider this scenario possible but not probable. 8/12

My sense is that real economic forces will catch-up. That is to say, the negative economic forces unleashed by the global lockdown will not go away but will be cooking away in the background as the year progresses, despite govt help.
9/12

Will this lead to a 30s style depression?

I think it’s unlikely & I pray it doesn’t happen. The fact that the IMF are warning about that brings out the cynic in me which says, ‘Fade that call’.

But, I don’t think I’d be exaggerating to say that the worst recession in 10/12

living memory is ahead of us, and this cannot be squared with anything other than a bearish stock market outlook.

However depth (or timing) I have no sense of. Shallow, deep, prolonged, who knows? I traded through the stock market of 2008. All the signs through late 2007 11/12

were of a severe recession, however the stock market decline was relatively modest until Lehman’s collapsed later that year. Perhaps without the Lehman’s collapse as a catalyst, who knows how deep/shallow the sell-off would have been. The future path is yet unknown. 12/12