Bernie Sanders vs. Coronavirus - Dylan Jovine

Writing About the Stock Market & Life Since 2003


Bernie Sanders vs. Coronavirus


Cracking beers. Drinking shots. Doing cartwheels.

And why not?

Bernie Sanders had just taken the lead in the Democratic primary. America’s version of Jeremy Corbyn looks set to become the Democratic front-runner for President of the United States.

I could already see the commercial Trump would be running in every retirement community across America:


“Bernie Sanders wants to eliminate private health insurance…raise taxes on the middle class…ban fracking and put government in charge of energy production…make college a taxpayer entitlement…offer free healthcare to illegal immigrants…and raise spending by $50 trillion over the next ten years.

A vote for Bernie Sanders is a vote to cut the stock market in half…

A vote for Bernie Sanders is a vote to cut your retirement in half…

You’re not insane.

Vote Trump for President.”

It’s hard to imagine many folks over 60 with a retirement nest egg (and sober) voting for Sanders.

So, Team Trump must have been doing high fives. Everything was going according to plan!

But then along came the Coronavirus. And that’s a different story. That means business is going to slow and that means the stock market is going to get hurt, at least in the short run. Wall Street has to reprice 2020 earnings.

This morning, Goldman Sachs revised their 2020 earnings for the S & P down from $174 per share. They now expect the S & P 500 to earn $165 per share in 2020.

At 18 times earnings, the S & P would trade at 2,970. It’s currently at 3,056. It looks like we still have a bit further to go before the S & P is fairly valued.

But the real question is where are investors going to go?

Are you gonna go into 10-year U.S. Treasury bonds? They’re yielding an all-time historic low of 1.3%. Imagine that: you give up your money for 10 years and get 1.3% a year for that privilege. You may as well stay in the stock market for that too.

No ladies and gentlemen, smart investors have few real places to go right now. That’s why it’s best to take a deep breath and relax a bit.

This isn’t our first rodeo. The good stocks you own will be fine over time – if they aren’t taken over first.

Now, does that mean the stock market won’t go down from here? Of course not. Scared money isn’t smart money.

But it does mean that at some point soon, investors are going to realize that stock prices are cheap enough…and interest rates are low enough…to start buying again.

We’ll be ready.

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