What Happened Last Week?


The S&P 500 gained 4.6% on its strongest day since December 2018, and the 27th strongest day since 1950. It seemed fair to say that this was little more than a normal snap back that we see after extremely oversold conditions. Statistics don’t make for good headlines because people understand stories better than probabilities.

The stock market was up big on Monday because we defeated socialism. Joe Biden took South Carolina on Sunday, slowing Bernie’s momentum.” 

I even saw some people suggesting that Sanders was more responsible for the worst week since 2008 than the Coronavirus.


The Fed did an emergency rate cut for the first time since 2008. Stocks went flying after the announcement, but the excitement was short lived. They gave the entire pop back, falling 4.2% from the high and closing down 2.8% for the day.  The indexes got hit, but certain “stay at home stocks” did well, like Zoom, which gained nearly 4%.

“The Fed moved too quickly”


The S&P 500 gained another 4.2% on Wednesday thanks to global central banks coming to our rescue. People dunking on the Fed just 24 hours earlier had pie on their face.

“Of course the bulls got bailed out, we’ve seen this movie a hundred times.”


The S&P 500 fell 3.4% on the session, but news of events being cancelled sent the stay at home stocks soaring. Zoom gained more than 10% on the day.

“The Fed is out of ammo. We’re going to retest the lows”


Stocks were down 4% at the lows, and just when it seemed like all hope was lost, a glorious 3:30 Ramp saved the day, bringing Friday’s loss to -1.7%, and leaving the S&P 500 with a 0.6% return on the week.

“Quiet week on Wall Street, with the averages little changed” ?

It’s scary when stocks go down a lot, it’s terrifying when stocks go down a lot and nobody knows why. Investors want order and they require reason, which is why you’ll never see a headline like “Stocks fell 3% today because millions of investors overestimated their tolerance for risk.”

Thinking in narratives makes us feel good. “X happened because of Y” gives us that warm illusion of control. But the danger of acting on them is that they can mutate faster than the virus, as we saw this week.

The most important thing investors need to do is put themselves in a position to survive the stories, whichever direction they should follow.