Jason Flurry, CFP
Taking MC Hammer’s approach to analyzing the current financial markets
Do you remember MC Hammer’s big song U Can’t Touch This? Of course you do. In fact, you’re probably even singing it in your head right now.
Well, the title of that song pretty much sums up how I feel about trying to invest wisely in this current stock market. You can’t touch this.
After all, just consider what we’ve seen happen in the past few weeks:
Coronavirus cases and deaths in the US and worldwide continue to rise with no effective vaccine or dependable treatment expected for months.
Over 22 million Americans are suddenly unemployed and find themselves dependent on a meager government stimulus check and their investments, which have also been hit hard recently, to make ends meet.
The Federal Reserve and US Treasury have taken unprecedented measures to slash interest rates and provide a so called unlimited supply of money (which is really backed my nothing other than the government’s good word – and our future tax dollars…) as a desperate move to keep us from falling into a Great Depression slide that would trigger a massive global recession
The price of oil craters to an all-time low – and even turns negative for a while, meaning oil producers would have had to pay nearly $40/barrel just to get someone to take one of their hands.
Many foreign central banks have declared negative interest rates on their loans in an effort to keep money moving in their countries and stabilize their currencies.
Companies are reporting abysmal earnings and not even offering any guidance about what they may be able to earn going forward (which is a key fundamental of a stock’s true intrinsic value by the way) because things are so uncertain.
And yet, in spite of all this recent bad news, the stock market has gone up! Talk about a dysfunctional disconnect from reality. I can’t touch this.
Additionally, there are also disturbing, underlying currents involved with the US dollar, the possibility of future hyperinflation, potentially threatening political and economic motives of oil producing nations and their cartel members, and the vast array of unknowns of how we’ll adjust to the “new normal” whatever it will be whenever it arrives. Where is the catalyst that will usher in a real, lasting recovery in America’s economy? I know it’s coming, but I don’t see it yet. Can’t touch this.
The stock market is known to climb a wall of worry, but is this a normal environment to be betting your financial future on? No, I can’t touch this.
Fortunately, not everything is bad. There are some good things we can focus on when it comes to savings and investments. Gold seems to be a continued safe haven with limited downside and attractive upside potential. Companies that will thrive in a stay at home world and in the days that follow, like Amazon, Verizon, and Johnson & Johnson, are relatively stable, financially strong, and well managed. And eventually, things will turn around creating incredible growth opportunities for us to regain what has been lost. That’s definitely something to look forward too and why having cash on hand will likely prove to be an unbelievable blessing in the foreseeable future!
See, I still have faith in the US economy. And I know that in time our focus on COVID-19 and its impact on our daily lives will fade away as quickly as rappers from the 90’s did - without us even realizing it. Until then though, I don’t believe it’s time to be speculating in the financial markets with your long-term savings dollars.
Instead, it’s Hammer Time! So get up, move, and enjoy yourself, but don’t touch this stock market yet.