Updated: Oct 7
This morning the stock market had a wake-up call, and reality is smacking the market right in the face. Let’s start with the bigger of the two problems – unemployment.
Suspend for the moment the numbers that the government is putting out there concerning unemployment. Are they lying to the public? No, they just use an unrealistic accounting method. If you want a real look at reality, look at the number of people who file unemployment benefits.
Every Thursday, the government releases data for the number of people who file for unemployment benefits. The assumption to be made here is that the reason for the filing is for unemployment. This morning 865,000 people filed for unemployment benefits. However, I estimate that over the past 26 weeks, the total number of claims is roughly 57,000,000 people. Fortunately, we have not averaged over the 1,000,000 level over the last four weeks. Unfortunately, we are averaging almost 900,000 a week. This is a real problem that will not go away overnight.
This, however, is the big story this morning. Wall Street is drinking the kool-aid as it assumes that a safe, effective vaccine will magically swoop in and save the day, all while being done in record time.
The director of the Centers for Disease Control and Prevention (CDC) has told a Senate panel that he thinks it will take one year before a coronavirus vaccine will be “generally available to the American public.” Of course, that is ultimately a wake-up call for the market. The market has been banking on this record-setting approval of a drug that will make this all go away.
Time to Evaluate the Risk you are Taking
I don’t write this to create gloom and doom. Everything I write is there to produce the other side of the story. In the media today, generally, only one story gets told, and half the time, that is even a rough version of the truth. With both sides of the story, you can make better decisions.
Here are some resources to help:
How to Invest in a Declining Stock Market
The ten don’t of 401 K investing
Risk Survey – (Here) Fill out this short survey, and we will send you a look at your true risk level.
You can also reach out for a no-cost phone consultation with Bob – Email Amanda at Amanda@prudentmoney.com and schedule a call today!