Market Bottom Not Here Yet

Including today's drop (so far), the markets are down 10% from a week ago, 20% from the highs.

As of 11 a.m. Eastern Daylight Time the stock market indices are down 6-7% (it's pointless to give an exact number; it changes materially every second). I've nibbled a little but the markets keep going lower, a reminder of the old Wall Street saying: "never try to catch a falling knife."

Thoughts:

The markets began falling last month when the coronavirus and a Bernie Sanders presidency, though unlikely, factored into investors' analyses.

With Bernie's chances receding, a Saudi oil-price war has replaced the socialist bogeyman. But aren't low oil prices great for consumers? Not in this case, because the Saudis are behaving like classic monopolists: bankrupt the weaker players as well as alternative energy companies, then raise prices.

The market's best case is an announcement that a coronavirus vaccine has been developed.

The second-best case is that treatments like Gilead's remdesivir stop the sick from getting worse.

The third-best case is that the contagion (inevitably) spreads in the U.S. and U.S. fatality rates show that the coronavirus is 2x or 3x worse than the flu. The worst case is that the disease is 10x as bad or more.

If we can take the worst case off the table, everyone--businesses, governments, consumers--can adjust accordingly. That will signal the market bottom.

I wish I had more cash to invest....