Even in a fully traumatic longer term crash, The initial rally can cut the first leg of the
decline by half. That would be around 2800 on the SPX . The 2800 level also would equate
wth fair value under fully normal conditions. We are far from normal times, so it is time for
me to exit and concentrate on what's next at my leisure.
In Wiley Coyote fashion, stocks recently went off the cliff, and shorter term, forward looking
economic indicators have done so as well. With 'stay at home' orders in effect across most of
the US and a number of foreign countries as well, all in the context of a debt laden global
economy with plenty of economic slack, it does not tax the imagination to foresee the start
of a deflationary depression replete with widespread and enabling defaults.
Central banks have their windows wide open and fiscal policies are turning very liberal, all to
limit the damage while nations struggle to contain and eventually bring the covid-19 to heel.
As we all know well, this is a tall order for a variety of reasons tied to the ugly nature of the
Like most everyone, I am hoping for succes over the next three to four months so the 'stay at
home' orders can be lifted and governments can begin the work of re-opening economies in
a way that can minimize future substantial flare-ups.
As time goes by, popular sentiment to re-open economies will strengthen and leaders will have
to be firm against this blowback lest economies hit the throttles prematurely and crash health-
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!