Far East Capital Newsletter
Governments are throwing us under the bus
16 Mar 2020

In This Issue

Governments are throwing us under the bus

There are many words that we can use to describe the performance of the markets, depending upon how intelligent we want to sound. I’ll just settle for crazy, or maybe ridiculous. The main point is that markets cannot behave like this for more than a short period of time or the equity market system will be unworkable.

So, assuming that the lunacy is a short term phenomenon, what should we do? Traders might be tempted to buy at heavily discounted prices, but that would be a bit like trying to catch a falling knife. What might be cheap today could be expensive by the end of the week. We just don’t know where these markets are going, so standing on the sidelines could be the best strategy.

The market is telling us that there is going to be real economic pain because of the virus. Well, actually, it is not the virus that is causing the pain, it is the gaggle of governments around the world that is shutting down global trade and in many cases, domestic commerce. The preventative cure seems much worse than the disease. 

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