Memo to self, and anyone else who is listening: Every time you think it is the end of the world, it isn't.
And on the anniversary of the biggest part of the COVID-19 selloff, we need to think about what can go right, what has brought us to these most exalted levels, and endless series of new highs, including today's S&P 500 topper.
It's certainly easy enough to surrender to emotion, the emotion that bred the panic of March 15, 2020, when the Dow dropped nearly 3,000 points and the S&P gave up 12%, to close the day down 30% from the high. Only nine names in the S&P finished in the green.
Don't I know it. I had been screaming at the top of my lungs for weeks that the pandemic was coming, that it could destroy whole industries, that there seemed to be nothing that can be done.
Was that a misread of the situation? Absolutely not.
'I come out like this: Some of the smartest minds say it's already too late to stop and millions will get it in true pandemic style.' - Jim Cramer, Feb. 13, 2020
If anything, it was the opposite: It was a plea to the policy makers to do something, to think big, suspend the bickering and to avoid intransigence or, worse, worry about the collateral damage of making rich people who own stocks richer.
The time had come to part the waters and the waters had to be parted by the president, the Treasury Secretary, the Speaker of the House, the Senate Majority Leader and, most important, the Federal Reserve.
What's most amazing is the seeds for the turn were actually planted in the 24-hour news cycle that was that horrendous day.
First the Sunday night before that Monday Fed Chief Jay Powell took to the airwaves and called for a full 1% rate cut, a huge buy of bonds, a slash in the discount window so there would be no stigma for any bank that needed it and a coordinated central bank action to fight the coming plummet in economic activity.
So then why was Monday so frightening and full of panic? Because the market was dead wrong. It took Powell's judgment of the need for big action and decided that things must be far worse than anybody thought-especially then President Trump- or he wouldn't be coming on Sunday night to take action. Too extreme.
In retrospect it was shocking how dumb the market was. It was one of those moments where you have to respect the idiocy of the crowd and go against it.
'Am I seriously to believe that there are only 11 confirmed positive cases in this entire country as of yesterday when there are 20 on a Carnival Cruise ship off of Yokohama?' Jim Cramer, Feb. 6, 2020.
Further, there were two other things that happened this day last year that, remarkably played a gigantic role in what good was about to occur, two positives that were completely overlooked and, metaphorically held the keys to finding a bottom.
First, analysts learned that Tesla (TSLA) would have plenty of capital on hand and could make the numbers if not beat them. The news shocked the doubters and caught the eyes of what would ultimately be a new group of less jaundiced, more positive investors, certainly more positive than the parade of hedge fund managers who scared the living daylights out of us over the course of the next few days.
Second, a little biotech outfit called Moderna (MRNA) , had just blocked the virus from infecting one participant. Its stock soared 24%.
Over the next few days Congress and Treasury Secretary Steven Mnuchin worked hard to get a package together, a package much larger than anyone dreamed to get money into the hands of individuals who would be hurting from the massive shutdown of the economy.
The market remained skeptical. It actually didn't bottom until a week later when the government hammered out a $2 trillion aid package and Chairman Powell went on the "Today" show to warn people not to bet against the Fed.
"We're not going to run out of ammunition," he said to a skeptical Savannah Guthrie. "That doesn't happen."
That was it. We've been pretty much straight up from there, as it became clear that the Fed wasn't going to let there be runs on cash reserves, or missed payments on bonds or even the ability of the most junky borrowers-like Carnival (CCL) , the epicenter of the darned pandemic-to access capital markets.
Hedge fund managers stayed skeptical throughout this terrible time, some roiling the market with their own negativity.
But when individuals got their checks from the federal government, the craziest thing happened: An appreciable number of young people opened accounts at Robinhood or the cash app at Square and, aided by no commissions, went to work buying what the hedge funds were selling. I have done a lot of work on that period and these legions of new buyers went for the most dangerous, the craziest things, cruise lines, airlines, and, yes Tesla. Their buying was relentless and, at the time, seemed foolish, especially compared to what the largest investors ranted about when they discussed how "hell is coming, and, how, "America will end as we know it."
Why don't we be wary of those words, when we hear them, too? Because, they tend to help create a bottom of their own.
Is the rest, as they say, history? Maybe.
The Fed did its part, Congress did its part. But, most important, science did its part and that Moderna drug, the one that stopped the infection of one person? It turned out to work for millions along with a similar two-shot combination by Pfizer (PFE) and BioNTech (BNTX) . Moderna's now working on a pediatric trial to protect the last group of people still at risk from the illness.
Remember, it was never a financial crisis. It was always a public health crisis. You keep the economy at bay until the pandemic is solved, you get to the promised land.
Now, there's a ton of irony here, not just the S&P high. One look at the Wall Street Journal's front page makes you blanch, because it's the exact opposite of the paper one year ago. Lead story: "Air Travel Showing Signs of Turning the Corner," about how travel, almost non-existent a year ago, is now getting robust again, something most skeptics never thought possible not that long ago. "Banks Eye Cash Reserves for Profits," the most positive article I can ever recall in the Journal about the prospects of the financials. Or "This Housing Boom is Different" a piece about how unlike in the 2000s, homebuyers are putting down wads of cash to buy homes. They article points out that on a million dollar purchase people are putting down $500,000.
And then, in a little levity, we have "Tesla Crowns its New Technoking," about Elon Musk giving himself a new title, one he felt compelled to file with the SEC. We wouldn't be laughing last year at this time.
Now I want to be certain we recognize that just as you get the "memo to self, the world's not ending," you also have to accept a second memo: "There are moments that might be too good to be true."
If Jay Powell saw a depression coming and decided to head it off, perhaps he sees a boom coming with attendant inflation and a need to cool that one off, too. Or perhaps he correctly judges that there is no real core inflation and he better keep from raising rates until we have better employment. Remember, the Fed helped large business with credit, but the smaller ones, like the 150,000 restaurants that went under? The people who lost their jobs in that industry are still scrambling and the winners don't need any more help.
The lesson's clear, though: If the policy makers use the wisdom gleaned from the past, and the scientists work the magic many thought was no longer possible, then the darkest moment really is the dawn and the light at the end of the tunnel is genuine sun and not the that of an incoming train.
