Correction City (Podcast)
By The Investing Edge:
By Daniel Shvartsman
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Four different forces combined to create a big sell-off last week, and then a jagged but strong rebound this week. There's of course the spread of the coronavirus, COVID-19. There is the Democratic primary in the US and what it foretells for the Presidential election in November. There is the, ahem, healthy valuation of the stock market, poised at all-time highs before the 7-session sell-off. And there's the role of the Federal Reserve, both in setting interest rates and in providing liquidity to the markets.
Akram's Razor and I tried to sort out the different crosscurrents and see where that leaves investors and traders on this week's The Razor's Edge, featuring discussion from his similarly titled The Razor's Edge Marketplace service. The market has been moving fast, and naturally we bottom-ticked the correction when we recorded this episode Friday afternoon. I am no market pundit, but I think there is every chance of continued volatility, so hopefully this will make for useful listening, meanwhile.
A two-parted disclaimer: this podcast ran longer than normal, and we get into politics quite a bit. Fortunately, our political focus is mostly in the last 40 minutes or so, so you can avoid it if you'd like. Though if you listen, you'll learn the way to impress Akram (it involves timely historical references to other NYC mayors who have run for president).
Topics Covered- 3:00 minute mark - How are you sizing the current market correction? Does this change your stance?
- 6:30 - Once you figure out your starting point how much does the virus matter?
- 11:00 - Is there a risk of market contagion?
- 20:00 - Was repo buying necessary?
- 21:30 - Has there been a fundamental change in the market such that it won't bounce back this time?
- 29:00 - NVDA as an example
- 31:45 - Have you made changes to your exposure?
- 40:00 - Does something like this week change people's perspectives?
- 47:00 - How do you evaluate a "drop" vs. a recession?
- 1:00:00 - The election from a markets perspective... general politics.
See also Navigating Turbulence on seekingalpha.com