Getting Constructive

"I'm starting to feel a little better about this whole thing."
--John Tuld (Margin Call)

Another ugly day yesterday with the Dow down -3000. The 13% loss in one day ranks third all time. Dow is off more than 30% in a month.

Fund manager equity allocations and economic outlook:

As fund managers have reduced equity allocations most this month, they’ve also turned most pessimistic on global growth in history of @BofAML’s Global Fund Manager Survey @SoberLook pic.twitter.com/wGcGkuRigf

— Liz Ann Sonders (@LizAnnSonders) March 17, 2020

Nasdaq sentiment index:

Nasdaq sentiment has never been this pessimistic @SoberLook @BofAML pic.twitter.com/oPYIjC1pA4

— Liz Ann Sonders (@LizAnnSonders) March 17, 2020

While there is good cause to be bearish, I'm growing increasingly constructive. The COVID 19 situation is driving emotional, fast thinking processes that are prone to overreaction. As time progresses, human reasoning is likely to kick back in and recognize the dynamic responses--many of them well underway--that enable adaptation to the health situation. I sense that this point of recognition may be sooner rather than later.

While a whoosh or two lower may be necessary to clear things out, it seems entirely possible that a sustainable low is quickly approaching. As such, I continue nibbling here and there.