Stock markets across the globe have appeared rather optimistic lately.
They’re shrugging off jobless claims, COVID-19 and even massive stimulus efforts.
You’ve got to wonder…has the world gone mad?
We’ll tackle that question shortly…
First, let’s discuss COVID-19.
There’s a lesson we can learn from the small island country Taiwan.
The WHO ignores Taiwan
They’ve got a population of 23 million. And they’ve only got 376 confirmed cases of COVID-19.
To date, they’ve only recorded five deaths.
And, unlike China, these numbers are most likely believable.
So, what can we learn from Taiwan?
Well, let’s preface this by pointing out the obvious here. I’m not a doctor.
But here’s where Taiwan got it right…according to the facts.
Taiwan researches concluded back in January that COVID-19 could transfer human to human.
The island country notified the World Health Organization (WHO) about this. Though, the WHO ignored this research and advised the world of the exact opposite.
You could say this early observation gave the island country ahead start on the pandemic. Which they’ve used to their very own advantage.
And as the WHO strongly suggested countries don’t close bordes with China…
Taiwan placed an immediate travel ban on the affected areas in China. It later widened them.
As for wearing masks…well, the WHO advised countries that masks were not required.
Taiwan didn’t agree. It enforced that every person in the country must wear a mask. And fines applied for those who did not use them.
Now, let’s go back to those numbers…
The island nation has 376 confirmed cases, and just five deaths.
There’s a lesson the world can learn here…
Have you seen the Dow?
Anyway, there is one questionable debate Taiwan has brought to the table.
They’ve now stated that social distancing isn’t the answer to solving this pandemic.
Instead, every single person must wear a face mask.
That’s the thoughts of Li Bing Ying, a doctor at the National Taiwan University Hospital.
If you ask me, social distancing and using masks when in public is the key here.
Though, what would I know?
Alright, let’s jump back to the stock markets…
It appears the ‘fear of missing out’ has ramped up.
Profit Watch Editor Callum Newman alluded to this recently.
There’s been an influx of investors deciding that now is the time to buy.
Brokers have also seen an increase of new accounts being opened.
I also had to come up with a new catch phrase. It goes ‘if you’re asking me what stock you should be buying, that tells me that the final low is yet to come’.
I had to do that as there’s been a jump in people reaching out for advice. I don’t give tips.
Investing isn’t easy. I don’t try to make out that it is anyway.
And with the Dow Jones rallying 10% since its 23 March low. And the Aussie markets up around 20% since it’s low…
A move like that looks way too easy.
And what are these moves on the back of?
Nothing. Absolutely nothing!
I don’t know about you, but I’m stuck inside the walls of my home. I’ve got nowhere to go and I’m not spending a dime.
How can stocks be rallying? Well, I think it’s ‘bottom fishers’ and ‘bargain hunters’.
The Dow reversed at a key level
I think people are looking for a bargain and they’re snapping up stocks.
The problem is, no one knows how high this market can run before it reverses sharply again.
There is a chart I showed you not too long ago of the Dow Jones. Take a look at it below:
It has three lines on it. The three lines measure the 38.2%, 50% and also 68.1% levels.
You would use these levels to gauge how high the market can rise after a down move.
The most powerful level is the 50% (red) level.
It looks like the Dow Jones came just shy of that level and is now reversing.
I wouldn’t be buying the market as it approaches that 50% level. And you shouldn’t be either.
I think it’s fair to say that the world has gone mad.
Any investor who ran into buy over the last two weeks expecting the final low to be in, could be in for a rude awakening.
Only time will tell, though.
Until next time,
PS: If you want to receive ongoing updates right to your inbox. Just click right here. Next time I’ve got something important to share with you. You can read it right in your email.