As we compose this, gentle reader, we are coughing and achy, but no fever or foreign travel, so the public authorities here in Dixie waved us on and didn’t swab our bodily fluids because we suspect, they don’t have enough tests to waste on, let’s say, senior sorta guys who look like they can limp along for a little while longer. Or, more depressing, they harbor the unspoken thought that guys like us – and we have to glumly agree – are no big loss. No worries.  Still taking in plenty of oxygen between Marlboros.

In any event, as we warned in “The Great Fires of 2020”, “the world is due for something to blow up.” And so it has. Much has been made of the overused “black swan” to explain the equity market meltdown, which is true as far as it goes.

A worldwide recession, if not depression, is certainly baked in the COVID-19 cake.  Indeed, this is one of the easiest episodes for the financial reporter to tell her readers why the market soufflé has collapsed.  But there’s another ingredient in this not-so-secret recipe: stocks were just too damn rich.  Getting into our way-back machine, the ratio of market capitalization to gross domestic product was about 152% at the end of 2019.  At the close March 16, the ratio was 110%, suggesting stocks are near fair value.  Of course, the denominator in this fraction will be getting smaller as well; thus, stocks may still not be a bargain measured by the resized economic pie.

So don’t be satisfied it’s safe to buy stocks. Get out now: We’re doomed. As we heard some expert or another characterize the pandemic’s ultimate outcome, we’ll either get immunity or die. So we have that going for us. After all, the 10-year Treasury note yield at this writing is at 1.038%. It began the day at 0.78%. What a world! Still, one would have netted about 190% in price gain if she had followed our advice to buy at 3%, not to mention the raise she could get by refinancing that big old mortgage.

We anticipate your riposte: A stopped clock is right twice a day. And that’s a fair criticism of equity perma bears like us. Yet we still insist stocks are only for those willing to believe they are smarter than Mother Nature. (And, to be fair again, there are those among us who can see what we cannot see. The rich are different than you and us).

But if you are not one of the one-percent, we are reminded of Cary Grant’s character in “North by Northwest” telling government agents: “I've got a job, a secretary, a mother, two ex-wives and several bartenders that depend upon me, and I don't intend to disappoint them all by getting myself ‘slightly’ killed.”  We don’t either, gentle reader.

What to expect? 

• The Federal Reserve Board’s ability to keep financial markets liquid remains formidable. At the first sign credit markets were seizing up, as fixed-income and equity sectors fell in tandem, the Fed stepped in and righted the bond-stock relationship. It can succeed in this respect, but cannot defeat the lack of ventilators or the coronavirus grapes of wrath.
• The unemployment rate will reach double digits in next month’s employment report in March.
• The United States will not shut down like Italy. Americans are too restless, too diverse.
• If you must buy stocks, we recommend Amazon, which will rule the world once the dust settles. And pick an airline. The industry will be bailed out.
• Budget a $1,000 or more check in the mail in the next 30 days. Don’t spend it all in one place.