April 2020 – Tough Month
April Looks Like It’s Going to be a Tough Month
(This may be the understatement of the year)
Supposedly as we head into the peak or the peak of this coronavirus, I hope you are doing well. My family is safe, and I hope yours is also too. I stated in my last newsletter that this is the 6th bear market that I’ve been through as an investment advisor and I can tell you, every bear market feels like Mike Tyson has punched you right in the gut. This one is a little bit different because not only are people worried about their money and their jobs, they are worried about their health.
Please, let’s all try to follow the guidelines of social distancing and I know I’m doing my part. I’m glad to see the governor of the state of Florida finally locked it down. Fortunately, the investment advisory business is considered essential, so the office remains open. While the office is being fully staffed, I will be working mostly from home, so I wanted to give you some contact information. Most times people don’t answer their phone if it says “unknown” or they are just not sure who it is calling. So, I want to give you 2 phone numbers of mine. One is my business phone from home (407-834-8449) and then the 2nd one is my personal cell phone (407-310-3930). Always please call the office first because the office is in contact with me. The reason I am giving you these phone numbers is that over the decades I pride myself on always getting back with people in a matter of hours. It is certainly no later than that day. And you will also find the office can help you as well, perhaps you are trying to do your accounts online or whatnot.
The Market Status: As I write this newsletter in the 1st week of April, the market swings continue.
- One day up 5%
- One day down 3%
- One day up 4%
- One day down 2%
I’m sure you see the pattern. There is tremendous volatility even though I don’t believe there is as much as it was 2 or 3 weeks ago. Traditionally, the stock market is priced on companies’ earnings, but since earnings are going down because most businesses are closing up for this next 3, 4 or 5 weeks, I believe the market is being priced on how well or how bad on the war of this virus. Unfortunately, like in war, the market is watching a couple of indicators to see how the progress is going. It is watching the infection rate and the mortality rate. I believe these rates are supposed to peak in the middle of April – Florida maybe a week or so later. A good sign for the market would be if the infection rate and the mortality rate gets flat. It is not a good sign to you if you happen to catch the virus.
We may have hit the bottom maybe about a week or two ago. Look at the chart on the next page. It shows a couple of important things that took place in the last couple of years.
- We had a correction back at the end of 2018,
- Then we had a great year in 2019 and you can see that the market may have hit the bottom a week or 2 ago because the S&P 500 got down to 2200.
- Only time will tell. This will be very important if the market doesn’t go past this area.
- Yes, we expect volatility between 2200 and probably 2600-2700. If the market doesn’t violate this, then we can be pretty assured as time goes along that the bottom is in.
Source: https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=SPY&insttype=&freq=1&show=&time=9
Potential Game Changers:
When it comes down to this war, it’s not going to won by politicians or pundits on TV. But by how well our healthcare system operates. The frontline healthcare workers are utterly fearless. I really don’t know how they’re able to function day-in and day-out Our lives and those that we love are literally in their hands.
I’m also watching how our private healthcare companies are ramping up as well. There are 3 or 4 areas that could be game-changers.
- The 1st is the testing. The testing is amazing to watch how quickly they’ve been able to take a test that lasted 7-10 days down to a couple of days, down to a matter of minutes. So, I believe they have a handle on that, they just must increase production which is easier said than done.
- The second thing is the therapies that will help shorten or maybe lessen the effect of the virus. It looks like companies are really working on that and only time will tell. However, I do believe within the next 7 to 14 days we will know if there is something that will help people. COVID patients must have some kind of hope today that they can take something that gives them a chance at getting better.
- Third, the vaccines. When you understand how long it normally takes vaccines to go through testing and go into production, it’s normally years. Well some of the pharmaceutical companies are doing something different, while they’re testing these vaccines, they’re also ramping up to do production. I believe J&J (Johnson & Johnson) has been working on a vaccine which they think if it gets approved, they’ll be ready in a number of months to surge a billion vaccines.
- Lastly, the testing that will be important to really help America get back to work is this test for the antibodies. Another promising area will be the government teams are saying healthcare providers will be able to provide 60% of the individuals of working age with antibody tests by the end of April and 95% by the end of May. Individuals with elevated antibody levels will then be able to return to the workforce with minimal risk of reinfection. How many? Such tests could enable initially millions of people who have already been exposed. I believe this could possibly be a game-changer if there are millions of people in this country that have already actually had this.
Certainly, we’ve all got our fingers crossed for the therapies and the vaccines, but I believe that by allowing people who already have been tested, exposed, and now have the antibodies in their system to go back to work very quickly- this could be promising and would help us economically much quicker.
My job as your investment advisor is to help you recover. Understandably, nobody likes a beat down. I always remind myself how far the market has come as oppose to when I first started in the business. When I first started in the ’80s the Dow was under 1,000. You can fast-forward and look at all these challenges that we’ve had in this country in the last 20, 30 years. We’ve had 9/11, The Great Recession, now this killer virus, and yet the Dow is up 20-fold in this time. I tell people never to bet against the American economy. Finally, once again, I am giving you these numbers so if something happens, if you need to talk to me, you can call me. Or if I’m trying to get a hold of you, just kind of recognize these phone numbers and maybe put them in your cell phone or whatever so you know that it is me. I wish you well and I hope you stay safe.
Sincerely,
John Romano, CFP®
Work from home Phone Number: 407-834-8449
Personal Work Cell Phone Number:407-310-3930
Office Phone Number: 352-753-8590
Email: [email protected]
John Romano, CERTIFIED FINANCIAL PLANNER™, has over 30 years’ experience in the financial field. John is a Registered Representative with Securities America, Inc. (a member of the FINRA and SIPC), and an Investment Advisor Representative with Securities America Advisors. He has prepared hundreds of reports for retirees to assist in their retirement income planning needs. He is dedicated to providing portfolio analysis, dividend and income information, and investment management services to retirees (and those preparing to retire) in The Villages, Florida, and throughout the United States. Securities offered through Securities America, Inc. Member FINRA/SIPC, John Romano CFP® Registered Representative. Advisory Services offered through Securities America Advisors, Inc. John Romano Investment Advisor Representative. Romano Income Strategies and Securities America are not affiliated. Trading instructions sent via e-mail may not be honored. Please contact my office at (352)753-8590 or Securities America, Inc. at (800) 747-6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated. Guarantees are based upon the claims-paying ability of the insurance company. Past performance does not guarantee future results.