FedEx shares were off more than 20% in off-hours trading Friday. If sustained, that would be the biggest one-day fall for the shares going back to at least late 1984, according to FactSet. That’s more than the 16% plunge it took on 1987’s Black Monday.
Wall Street Journal Today
For new readers, here is the story to date. All major stock indexes peaked between November 2021 and the first week of January 2022. The bear market began ending bull markets dating back decades, 1982 for example. Prices declined into the third week of June. A counter trend rally ended in mid-August. The third or strongest wave down then began. It has erased 3,000 Industrial points in just one month. A brief rally ended Monday. The slide resumed with a 900-point decline Tuesday. Check the opening quote on FedEx.
What is your “financial advisor” telling you? Let me guess. Markets have periods of “volatility” and one has to just ride them out. He or she probably also told you that a balanced portfolio of stocks and bonds will buffer you from misfortune. The problem is that the entire character of the market has changed from bull to long-term bear. In a bear market, all prices fall. Now the prices of bonds and stocks are falling. Meta has lost more than half its value and Google one-third since January.
It is said that a true bear market requires an absence of those who experienced the last decline. That is what we have now. None of the 40-year-olds sporting Certified Financial Planner designations were around from 1972-1982, a 10-year period of stagnation. Yet we have the same setup now as then, rising interest rates.
I am getting questions from individuals. But when I suggest they simply get out of the market and roll CDs as rates increase, all I get is a blank stare. The decline in prices will likely extend to year 2024. If the FANG stocks which powered this rally are already down 30-50%-plus, where will they be in another two years?
Yes energy prices are falling. But like FedEx, that is a suggestion that the world economy is slowing. And natural gas prices, as in 1972-‘82 are soaring, crimping home budgets.
Markets are a reflection of social mood. Just this week the CEO of McDonald’s warned his Chicago restaurants are awash in crime, homelessness, and drugs. A borderless country facing higher interest rates and an unchecked crime increase is not the basis to sustain a bull market. Take defensive action while you still can.
