The Coronavirus Broke the Weighing Machine

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COVID-19 triggered a rapidly unfolding story of human tragedy and economic devastation. It also unleashed a disturbing volume of content masquerading as objective analysis. Much of it is just a smoke screen to advance personal and corporate agendas.

My inbox, clutter and junk files are full of thinly veiled attempts to gain from, or capitalize on, the historic events we are living through. Some are from perma-bears who, after more than a decade of crying wolf, are claiming justification for their gloomy views. Others are from product providers whose high-fee hedging strategies or “diversifiers” have added no value for years, but are now touting their great performance for the month of March. Even the market timers have re-emerged claiming they can navigate these volatile markets and trauma-proof your portfolio.

This smoke-screen commentary does the advisory profession a disservice. Advisors are seeking help to make sense of the chaos and guide their clients through a volatile period infused with emotion and uncertainty. At best, it distracts from the search for clarity. At worst, it misleads and sends advisors and their clients down a misguided path.

One version is articles that declare that the recent decline in the stock market proves that the market was over-valued. Those articles are inevitably penned by people who have wrongly predicted a decline in the market for years and appear to be seeking vindication for their erroneous prognostications. One example is an article by Bob Rodriguez that recently appeared in this publication. Preliminary Thoughts—The New World Order.

In that article, Rodriguez stated, “Many times I expressed the opinion that I thought the various equity markets were at least 40-60% over valued. Recent events would tend to confirm my assessment…We knew there would be a pin that would prick this unbelievably speculative bubble but we just didn’t know what it would be. Now we do.”

Rodriguez predicted in 2009 that, “if we did not get our economic house in order, we would experience a crisis of equal or greater magnitude than the 2008-2009 period, and that this would take place after 2017.” Showing the courage of his convictions, he stated in a recent interview with Jane Wollman Rusoff that he has not, “had direct ownership of equities since 2016.” The stock market ignored his predictions and rose by over 70% from 2016 through 2019.