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WHAT'S LOGIC GOT
TO DO WITH IT? |
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I perused the morning news reports yesterday and received the
usual barrage of bad stuff. Rising COVID-19 cases throughout the country,
hospitals reaching capacity, massive unemployment, Los Angeles mayor
threatening to close all non-essential businesses, and much , much more.
"Only one place to go to get some good news," I
said to my wife, who was slumped over the kitchen table, thoroughly
disconsolate.
She raised her head slightly. "Do you really think it
can come through for us again?"
"I don't see why not," I replied. "It doesn't seem
to have any correlation with what's going on in the world."
"Okay, check it out," said my wife, a glimmer of
hope in her eyes. "I need a pick-me-up."
I clicked the app on my iPhone and instantly my mood brightened. I
couldn't wait to share the news with my wife.
"The Dow Jones is up 300 points," I exclaimed, pumping my
fist. "And I have no idea why."
"Is the NASDAQ still at its record high?" asked my
wife.
"Yep. A little global pandemic, worldwide recession, record
unemployment and a $4 trillion budget deficit for 2020 apparently won't
stop the optimism of investors."
Like many fortunate Americans, we have some money in the
stock market. When the pandemic hit the United States in March, I wasn't
surprised to see the stock market tank. The Dow lost 2019 points on March
9th, 2352 points on March 12th and a record 2997 points on March 16th, for
a drop of over 23% in value by the end of the month. And the pandemic was
only getting worse.
That made sense. The economy was shutting down, businesses
were closing and there was enormous uncertainty as to the future. Of
course the stock market would take a beating.
Logic prevailed. Now the virus is surging and uncertainty as
to the future is surging as well. And the stock market is booming. Go
figure.
Since I know very little about the mechanics of the stock
market, I called my broker for an explanation of why I shouldn't take
every penny I have invested in the market and head to Las Vegas before
they close the casinos again.
After a 30 minute discussion on low interest rates, the
stimulus package, tech companies, the effect of presidential elections,
the bond market, consumer confidence and 12 other subjects that had my
head spinning, I surrendered. I'd leave everything as is.
But I still don't get it, and apparently never will. Instead,
I'll just weather the downs and enjoy the ups, like I did yesterday
morning. I'll take good news wherever I can get it.
"What did he say?" my wife asked when I told her I
had talked to our broker.
"He said we'll have a vaccine within months, interest
rates will remain low until at least 2022, and don't buy Chipotle
stock."
"Why did he single out Chipotle?"
"I have no idea. Maybe he doesn't like Mexican food. He also
said to avoid airline and hotel stocks."
She nodded knowingly. "Brilliant. What did he say about
the biotech stock you bought last month? Did he call you a genius just
like you call yourself?"
She was referring to my purchase of a very small amount of
stock in a biotech company that is working on a treatment for COVID-19.
The stock has doubled in price since I bought it, a very rare win, at
least temporarily, for the worst stock picker in the world.
"He asked me if I wanted to sell it, and I said no way,"
I replied. "I'm riding it all the way to the top or all the way to
the bottom."
She reminded me of the quote from a friend who was involved
with a biotech company and always dissuaded friends from buying biotech
stock. He said there were two types of people in the world: 1)
Millionaires and, 2) Those who invest in biotech companies.
But this was different. I was in a win-win situation. In the
rare chance the company's drug was successful, it could be a game-changer
for the pandemic and, far less importantly, the stock would soar. And if
the treatment was a bust, the stock would tank and I could playfully blame
the good friend who gave me the tip to buy the stupid stock in the first
place.
Trust me, I'd much prefer the former. Meanwhile, I'll just
keep watching the stock market do its thing, logic be damned.
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