This is why why your 401k is doing ok

Posted on 05/27/2020 in misc

Like everybody else, the pandemic is "top of mind" 24 x 7 for me. I'm writing to help myself not internalize all of it. You can find other posts in the series at https://odonnellweb.com/pelican/tag/coronavirus.html

Ok is a relative term. If you left your diversified portfolio alone over the last few months you are most likely much happier today than you would have ever expected two months ago.

The market cares nothing about good or bad. Only better or worse. The economy is not as bad off as many thought it might be. As long as things are "better" than yesterday or better than expected, the market generally goes up. That better might be mostly based on bullshit, or it might be the Federal Government propping it up. None of that really matters. When Coronavirus first got serious in March in the US, the markets tanked on the expectation of a Depression like recession. That has mostly happened, but nobody is jumping out of their Wall Street windows. Lock in has sucked, but the business world appears to have somewhat adapted. McDonald's are still open, Starbucks are still open. They may not have paid their rent the last 2 months, and that may ultimately matter a lot. I say appears because I'm not sure I buy it. It may all come crashing down again if there is a bad 2nd wave of the virus. Or maybe that won't happen and our 401Ks won't look that that bad at the end of the year. Nobody really knows, but this explanation of the short term market moving up in a pandemic was helpful for me.

Further explanation here.

Image by Gerd Altmann from Pixabay