I Understood the Crash Better Than I Understand the Rally On March 20, I wrote to you (and risked making myself look foolish) by making a prediction. Those were scary times. In the prior week, we experienced three of the 20 biggest single-day percentage declines in the history of the S&P 500. Investors were on edge. My prediction on March 20 was that we had seen the peak of the volatility and that the ride was about to get better. I nailed it almost to the day. Lucky, yes - but it was also a prediction based on a lot of historical precedence. I also predicted (with less conviction) that we could see the market turn higher in early April. While that prediction was also pretty good, I would never in a million years have guessed how high the market would go. Just as the plunge in the S&P 500 in March was historic, so too has been the rebound. The 50-day rally in the S&P 500 up to June 3 saw the market go up by 39.6%, and it was the largest 50-day increase ever recorded. The entire historic decline in the S&P 500 in March has already been erased. It has been a breathtaking move, and it has a lot of experienced investors (including me) scratching their heads given that the global economy is in shambles. Clearly, the widespread buying opportunity that was there for us in March is now gone. We still haven't put COVID-19 in the rearview. I think the economy will steadily recover, but it is going to take time. I still see value in some pockets of the market, but other areas have gone from attractive to downright expensive. I believe the market has gotten quite a bit ahead of itself at this point, and I certainly wouldn't be surprised at a reversal. In fact, as a stock picker, I'm kind of hoping for it. As of now, though, the next time my wife invites friends over for a Saturday evening, they will be much happier about their investment statements. But they (like the rest of us) will need to be much more selective about the stocks they add to their portfolios at current valuations. Good investing, Jody | 
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