What people right now are expecting to happen, is that states will reopen, and people will wait and see if there are news of a “second wave” or new infections. And then people will all panic and realize that we’re either back to lockdown or half a million people will die, or it magically “disappear”. Only then, people are assuming that the market will react.
But the other investors on the other side are just as smart as you. There are probably very few people who think reopening will not cause a rise in infection. The smart money is definitely not that dumb. This is hot potato and the first to leave wins.
This has to happen before you’re expecting it, because the smart money has no reason to stay that long if they can leave before it. Why would they? Would you do it? They won’t wait for the news they know will come. Hell I bet some of them even control when the media calls it “second wave”. It’s all very arbitrary, calling it waves gives the media the power over public opinion. It’s open to interpretation. But call it a second wave and there you go, you have the public primed for a sell sign. That sell sign will come as a scare, to squeeze people to panic sell, not as the trigger to the initial selloff. Prices will be already low when that happens and they will use that to maximize buying. They would want those headlines to come when they can push stocks below their worth, not as a reminder to correct their prices.
A “second wave” headline will happen because the media won’t be silent over fast increasing case counts. Retail investors will sell on that news. Smart money won’t let other investors pull out before the headline comes, if they can maximize their sell before.
So the question, what is the timeline you think this will happen. And then the smartest reaction is to exit this earlier than all people here think.
So when do you think news will announce “second wave” ?
It’s also OK to post “I don’t think there will be a second wave”, or “second wave won’t crash the market, it’s priced in”, or “The market will crash only after we know states reaction to the second wave”. Would you sell on “second wave” news?
I’m guessing not more than 2-3 weeks until someone says Texas has a “second wave” (A rise in infections, although they never really reduced them anyway).
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.