March 2020
Global markets are undergoing a swift and drastic reevaluation following an almost 11-year long bear market. The triggering factor is the rapid spread of COVID-19 around the world and its negative effect on our globalized economies. In contrast to the global market fluctuations, we offer a form of investing that focuses on regular and safe cash flows with a stable rate of return.
Bear Market in the USA
COVID-19, which is better known as the coronavirus, was deemed a pandemic by the World Health Organization on March 11, 2020. This official label has created concerns and panic among investors worldwide and in the United States. The Dow Jones Industrial Average (Dow Jones) lost almost 2.000 points on Monday, March 9, 2020. On that day, trading had to be suspended to calm down the frantic emotions of traders. On March 11, 2020, the Dow Jones lost nearly 6% and dropped to 23.553 points. Compared to the Dow Jones’ record high of 29.551 points on February 12, 2020 this is a loss of 20.3% or almost 6000 points. This stark drop in less than 30 days marks the beginning of a bear market ahead of us. See chart “The long bull run of the Dow Jones Industrial Average” for details.
Bear Market Around the Globe
The atmosphere of panic and fear is repeated at stock markets around the world. In Europe, the British FTSE lost 22.0% and the German DAX lost 24.3% compared to the day when the Dow Jones reached its record level on February 12, 2020. In the Asia Pacific region, the Japanese Nikkei lost 21.8%, the Hang Seng from Hong Kong lost 12.4%, and the Australian ASX lost 19.2% compared to February 12, 2020. See chart “Global Bear Markets” for details.
Counter Measures Ineffective
Until now all counter measures have proved to be ineffective. The Chinese were unable to contain the virus to the city of Wuhan, where it originated. Despite a rigorous lock-down of the region surrounding Wuhan that included a shutdown of factories, the virus was able to spread across Asia, Europe and North America. The consequence of the shutdown was an interruption of global supply chain, which prompted investors to reconsider their stock valuations and began a global stock market slide.
On March 3, 2020, the Federal Reserve attempted to restore investor confidence amid the COVID-19 stock market decline by lowering the federal funds rate by half a percentage point – the biggest one-time cut in the history of the Federal Reserve. This measure proved to be short-lived and the Dow Jones and other global markets soon continued their decline as the virus continued to spread. On March 5, 2020, the Economist, a renowned British publication, wrote that the number of COVID-19 infections will double every 5 to 6 days. That is not a good outlook and the most recent infections numbers have underlined this point.
Payroll tax reliefs and other measures, as proposed by the Trump Administration on March 9, 2020, have also not been able to stop the slide in stock values. For this reason, additional measures were issued, such as a travel bans for travelers coming from Europe. A similar ban for travelers from China has already been in effect.
These measures are merely political statements. The virus has already reached the US, not to mention many major global markets. It doesn’t look like we have seen the end of the COVID-19 pandemic yet. It will likely get worse before it will get better.
In a time like this, we would like to offer you a form of investing that focuses on regular and safe cash flows based on a high-rate of return. Take a look at the concept of first deed lending and become a real estate lender without the hassle of being a landlord. This is your opportunity to earn a stable stream of income during unstable times.
