- As the coronavirus spread and the market plunged, many investors and analysts said we were headed for a depression.
- But as Alexander Green pointed out and savvy wealth builders understood, the market would not be down for long.
Isn’t it funny how different recent events look – and how “obvious” their unfolding – in the luxury of hindsight?
Four months ago, with the pandemic growing, businesses shutting down and people everywhere sheltering in place, the market underwent the fastest bear market in U.S. history.
The consensus was that we were headed into not just a severe recession but a potential or even probable depression.
Click here to watch Alexander Green’s latest video update.
New York Governor Andrew Cuomo even opined that – thanks to COVID-19 – things “would never be the same.”
Never is an awfully long time, however, as the pessimists never seem to learn.
The amazingly resilient American economy is already snapping back.
May retail sales rose 17.7%. This wasn’t just double Wall Street’s estimate. It was the biggest month-over-month increase in history.
From the March 23 low, the S&P 500 has put on a historic rally, one that includes the best 50-day run since 1933.
Yet many – perhaps most – investors missed it entirely.
During the downturn, they either sold in a panic or sat on their hands, reluctant to buy anything.
However, Oxford Club Members used the sell-off to buy dozens of high-quality companies at fire-sale prices.
When I pointed this out recently, some Liberty Through Wealth readers were irked.
“Hindsight is 20/20,” wrote Steve K. in the comments section.
Hmmm. Were we truly opportunistic and action-oriented as the market bottomed – or is this revisionist history? You be the judge.
On March 12, with the market in a free fall, I wrote here…
We’ve entered a dark tunnel. No one knows how widely the pandemic will spread, when it will peak, or how many will get sick and die. But it will end. Business will get back to normal. Life will get back to normal. And the markets will turn up again long before they do.
Four days later, I urged investors again to buy rather than sell and said, “At a future date – and it could be much sooner than you expect – investors will look back at today’s market and realize that they could have responded in a way that was decent… great… or awful.”
Yet the doom-mongering mainstream media convinced many investors that the fallout from the pandemic would only get worse.
In particular, the conventional wisdom was that the economy could not get back to normal until we had a vaccine against the coronavirus and that was at least a year and a half away.
I countered that millions of scientists and researchers around the world were working on the problem and sharing data with unprecedented speed, and suggested that we would have a vaccine this year.
“You are grossly overstating your case,” responded reader Ron R.
“Fortune cookie predictions at best,” scoffed another reader, Brian M.
I understood their skepticism. New vaccines generally take years to create, test and distribute.
After all, there are three big regulatory hurdles.
Phase I trials identify possible dangerous side effects and other safety concerns.
Phase II measures whether the drug successfully treats the condition.
And Phase III compares the drug against a placebo.
Never had a vaccine cleared these trials in a matter of months. Yet, to the astonishment of millions, it’s happening.
The Wall Street Journal reported last week that three COVID-19 vaccines are ready for the final stage of testing.
One developed by Moderna (Nasdaq: MRNA) will begin Phase III in July.
Vaccines by AstraZeneca (NYSE: AZN) and Johnson & Johnson (NYSE: JNJ) will soon follow. Each will undergo trials on about 30,000 human participants.
A vaccine this year for emergency authorization – including healthcare workers and other highly vulnerable members of society – has gone from an outlandish notion to a virtual certainty.
These potential vaccines, along with massive fiscal and monetary stimulus and the reopening of the economy, are the fuel that has powered the 40% rally in stocks.
In short, we were not only on the right side of the market. We were bullish for the right reasons.
At this juncture, however, the easy money has been made. From here, equity investors need to be far more selective.
Stay tuned to The Oxford Communiqué and my three VIP Trading Services for specific details.