Monday, March 16, 2020

Eight Reasons Why It Might Not Yet be Time to Buy

Under normal circumstances, a selloff of the scale and breathless rapidity as we’ve seen in early 2020 would mark a prime opportunity for bargain-buying of financial assets, notably stocks. The Morningstar fair-value ratio for the equities market as a whole is down to 0.83, off its recent highs above 1.06 – ostensibly describing a market even more oversold than it had been overbought a month ago. The Fed and other central banks around the world have promised liquidity infusions, the coronavirus seems to be slowing in Asia, the White House has signaled consumer-oriented tax relief, and the CBOE Volatility Index, or VIX, has literally never closed at this high a value in the history of its existence, a fact which in past selloffs has presaged a more-or-less immediate rally. Under normal circumstances, a decision to take fresh long positions in equities would stand as near to a can’t-miss play as amateur investing may reasonably allow.

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