As you may have surmised by my lack of posting, I’ve been away for a few days. Before leaving for Europe October 11, I posted Session 129, “House of Pain.” The market was down big and in a tizzy about Europe and fear that recent signs of weakness there (especially in Germany) presaged their shallow recovery being undone. Of course, there was Ebola and ISIS weaving their negative magic in the background. This reversed immediately, as soon my wife, Regina (a one-woman economic stimulus program) hit the ground in Italy. Voila! Europe is saved and the market is on a tear. It would be unfair to give Regina all the credit. In truth, Venice, Firenze and the Amalfi coast were teeming with touristas spending money.
But, let’s not pop the corks on the champagne just yet.
There’s that pesky Ebola that just keeps rearing its ugly head and the financial media is trying very hard to make it the new fear story (‘if it bleeds, it leads’). This is not to demean the fact that this horrible virus is an important story; only to say, at this point, it should not be a market mover … the new pandemic.
Importantly, Ebola is hard to catch. It is reported widely that you have to be in direct contact with bodily fluids emanating from a person manifesting symptoms to catch it. All of the U.S. cases were, in fact, in people who worked around the disease and had multiple opportunities for exposure. A second point I would make is that the world is finally beginning to take the disease seriously and resources are starting to flow (albeit in a not-too-timely fashion) to knock down this most recent West African flare.
Where’s the grief?
Well, it is mostly in the minds of the media (main-stream and financial), which deserves credit for getting the story out there, but not for stoking irrational fears. If you are in the market and you get your news from MarketWatch (an on-line service of The Wall Street Journal) or CNBC, you might get the impression every snippet of Ebola news could potentially blow up the market. Here are a few samples from the pre-opening headlines, Friday, October 24th:
From MarketWatch–“Wall Street set to open lower after New York Ebola news”
Now, I bookmarked all the stories attached to these headlines. Interestingly, only the CNBC stories were recoverable. The MarketWatch headline had been replaced by another story, “S & P 500 posts biggest weekly gain of 2014.” Oh, the things you can do and say on the internet!
All I can say is, thank you Regina (and all your countless like-minded minions) for the big week in the market. Between Italy and my portfolio’s snap back, I more than broke even.
How did your portfolio do last week?
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