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The Craziest Month in Stock Market History

Congrats! You did it. You lived through the craziest month in stock market history. Yes, March 2020 was crazier than any month in 1929, 1987, and, even,…

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Congrats! You did it. You lived through the craziest month in stock market history. Yes, March 2020 was crazier than any month in 1929, 1987, and, even, 2008. No, this doesn't mean that March 2020 was the worst performing month in stock market history. That title is held by September 1931, where the Dow lost a record 30.7% in a single calendar month. March 2020 ranks 16th overall for worst monthly loss (since 1915) with only a 13.7% decline in the Dow. Nevertheless, March 2020 was the craziest.

Why March 2020 was the Craziest Month for Stocks Ever?

How am I defining crazy? Well, in this case, I am referring to monthly market volatility. However, the specific measure I want to use is what I call the cumulative absolute percentage change. The cumulative absolute percentage change is the sum of the absolute value of all the daily returns over the course of a calendar month. So if the Dow returned +1% on day 1, -1% on day 2, +1% on day 3, etc. for 30 days, the cumulative absolute percentage change would be 30%. More simply, it's the absolute value of each daily return summed across a month. Using this measure, the Dow Jones Industrial Average had a cumulative absolute percentage change of 117% in March 2020! With only 22 trading days in the month, that is an average absolute daily change of a whopping 5.3%. The next highest month (Oct 2008) only had an average absolute daily change of 3.8%. Visually it's easy to see just how outlandish March 2020 was compared to all other months since 1915: March 2020 wasn't just a little crazier than the next 3 highest months (October 2008, October 1929, and October 1987 [What's up with October??]), it was significantly crazier. It outpaced each of them by over 30% in additional absolute market swings. More importantly though, the average cumulative absolute percentage change for a month since 1915 is only 15.6%. And since March 2020 had a cumulative absolute percentage change of 117%, this means that March 2020 had the same total market movements as 8 average months stuffed into just one! It's no wonder why March 2020 felt like the longest month ever. Not only did it have the highest VIX ever recorded (since VIX started in 1993), but it also had the 3rd biggest daily loss and the 5th biggest daily gain since 1915: Dow Jones Industrial Average daily percentage change in March 2020 I know this chart may not look that extreme, but when you compare it side-by-side with January 2020, its outrageousness becomes apparent: Dow Jones Industrial Average daily percentage change in Jan 2020 and March 2020 This is the difference between a more typical month and what we just experienced. If January 2020 was the calm, then March 2020 was the storm.

The Madness Outside of Equities

But it's not just what happened to equity markets that made March 2020 remarkable. If we look at how some other asset classes performed, March 2020 also looks like one of a kind: March 2020 asset class performance for various assets As you can see, both real estate (VNQ) and oil (OIL) performed worse than equity markets, with oil having its worse month since oil futures started trading in 1983! Additionally, gold acted as a semi safe haven, being flat on the month while stocks were down 12%. More importantly though, while long-term U.S. Treasuries (TLT) were up in March, there were periods where Treasuries lost money while stocks were also declining. This is not typical behavior, and provides evidence of a rare, market-wide movement to cash.

Qualitative Experience Matters Too

But enough of the numbers and charts. The thing that made March 2020 especially insane for most investors was the constant news coverage and speed at which everything was happening. From the NYSE circuit breaker tripping multiple times within multiple days to President Trump sending Lou Dobbs a signed stock market chart to every finance blogger (myself included) putting out more posts than ever, March 2020 was overwhelming. The entire month was an onslaught of information, fear, and uncertainty. And to top it all off, we spent most of this month physically separated from each other, sitting within the same 4 walls every day. For all practical purposes, we became prisoners in our own homes and there was little we could do to change our situation. It is this lived experience, which can't be put into a chart or summarized in a number, that makes months like March 2020 that much more real than what you read in a history book. It's a bit ironic that it took a virus from a foreign land for me to better understand U.S. history. Without coronavirus, how could I even begin to imagine what the Great Depression was like? Yes, you can read Benjamin Roth or Frederick Lewis Allen, but it's not the same as seeing the economy grind to a halt. It's not the same as seeing stores run out of basic goods. It's not the same as seeing more and more people lose their jobs. I can only hope that my recent limited understanding of an event like the Great Depression stays limited. Because as crazy as last month was, I hope we never see one like it ever again...
You Survived Despite how painful March 2020 probably was for you and your portfolio, I can only hope it wasn't terminal. And if it wasn't, then let me say congratulations again! You survived. As Peter L. Bernstein once said:
Survival is the only road to riches. You should try to maximize return only if losses would not threaten your survival and if you have a compelling future need for the extra gains you might earn.
So no matter how crazy this month was for you, the most important thing to remember is that...it ended. Yes, market volatility probably won't go away anytime soon, but I doubt April will be more hostile to your sanity than March was. I could be wrong though. Either way, the important thing to remember is that investing isn't about a single decision, but a collection of decisions over a lifetime. As Meb Faber said in Corey Hoffstein’s Flirting with Models podcast (start around 36:00):
I think a lot of what applies to our world of professional management, but also investors, is you just wanna stay in the game…the biggest important thing is to make sure that you live to invest another day. A lot of the very basic stupid mistakes are the most important things to avoid.
So, my friends, make sure to survive. Whether it's calm, it's crazy, or it's somewhere in between, please just survive. Thank you for reading! If you liked this post, consider signing up for my newsletter. This is post 175. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data

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Small Business Bankruptcies Surge In 2023, Five Reasons Why

Small Business Bankruptcies Surge In 2023, Five Reasons Why

Authored by Mike Shedlock via MishTalk.com,

Small business bankruptcies are at…

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Small Business Bankruptcies Surge In 2023, Five Reasons Why

Authored by Mike Shedlock via MishTalk.com,

Small business bankruptcies are at a much higher pace than any year since the Covid pandemic...

Small business bankruptcies from the American Bankruptcy Institute via the Wall Street Journal

The Wall Street Journal reports There’s No Soft Landing for These Businesses

Nearly 1,500 small businesses filed for Subchapter V bankruptcy this year through Sept. 28, nearly as many as in all of 2022, according to the American Bankruptcy Institute.

Bankruptcy petitions are just one sign of financial stress. Small-business loan delinquencies and defaults have edged upward since June 2022 and are now above prepandemic averages, according to Equifax.

An index tracking small-business owners’ confidence ticked down slightly in September, driven by heightened concerns about the economy, according to a survey of more than 750 small businesses. Fifty-two percent of respondents believed that the country is approaching or in a recession, said the survey by Vistage Worldwide, a business-coaching and peer-advisory firm.

Robert Gonzales, a bankruptcy attorney in Nashville, said he’s now getting four times as many calls as he did a year ago from small businesses considering a bankruptcy filing.

“We are just at the front end of the impact of these dramatically higher interest rates,” Gonzales said. “There are going to be plenty of small businesses that are overleveraged.”

Five Reasons for Surge in Bankruptcies

  • Rising Interest Rates

  • Surging Wages

  • Tighter Bank Credit

  • Overleverage

  • Work-at-Home Curtailing Demand

Fed Rate Interest Rate Hike Expectations Are Still Higher for Even Longer

The Fed has hiked interest rates to 5.25% to 5.50%. It’s the highest in 22 years.

And Fed Rate Interest Rate Hike Expectations Are Still Higher for Even Longer

Surge in Wages

Minimum wages have surged. Unions are piling on. Small businesses have to offer prevailing wages or they cannot get workers.

In California, Minimum Wage for Fast Food Workers Jumps 30% to $20 Per Hour. Governor Gavib Newsom called it a “big deal”, I responded:

A Big Deal Indeed, Expect More Inflation

Yes, governor, this is very big deal. It will increase the cost of eating out everywhere.

The bill Newsom signed only applies to restaurants that have at least 60 locations nationwide — with an exception for restaurants that make and sell their own bread, like Panera Bread (what’s that exception all about?)

Nonetheless, the bill will force many small restaurants out of business or they will pony up too.

30 Percent Raise Coming Up!

If McDonalds pays $20, why take $15.50 elsewhere?

The $4.50 hike from $15.50 to $20 is a massive 30 percent jump.

Expect prices at all restaurant to rise. Then think ahead. This extra money is certain to increase demands for all goods and services, so guess what.

Other states will follow California.

Biden Newsome Tag Team

Biden’s energy policies have made the US less secure on oil, more dependent on China for materials needed to make batteries, fueled a surge in inflation, and ironically did not do a damn thing for the environment, arguably making matters worse.

See  The Shocking Truth About Biden’s Proposed Energy Fuel Standards for discussion of the administration’s admitted impacts of Biden’s mileage mandates.

Newsom is doing everything he can to make things even worse.

The tag team of Biden and Newsom is an inflationary sight to behold.

Bank Credit and Over-Leverage

In the wake of the failure of Silicon Valley Bank, across the board small regional banks are curtailing credit.

The regional banks over-leveraged on interest rate bets. And businesses overleveraged too, getting caught up in work-from-home environments that curtailed demand for some goods and services.

The bankruptcies will fall hard on the regional banks.

Add it all up and things rate to get worse.

Tyler Durden Mon, 10/02/2023 - 15:40

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Fair and sustainable futures beyond mining

Mining brings huge social and environmental change to communities: landscapes, livelihoods and the social fabric evolve alongside the industry. But what…

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Mining brings huge social and environmental change to communities: landscapes, livelihoods and the social fabric evolve alongside the industry. But what happens when the mines close? What problems face communities that lose their main employer and the very core of their identity and social networks? A research fellow at the University of Göttingen provides recommendations for governments to successfully navigate mining communities through their transition toward non-mining economies. Based on past experiences with industrial transitions, she suggests that a three-step approach centred around stakeholder collaboration could be the most effective way forward. This approach combines early planning, local-based solutions, and targeted investments aimed at fostering economic and workforce transformation. This comment article was published in Nature Energy.

Credit: Kamila Svobodova

Mining brings huge social and environmental change to communities: landscapes, livelihoods and the social fabric evolve alongside the industry. But what happens when the mines close? What problems face communities that lose their main employer and the very core of their identity and social networks? A research fellow at the University of Göttingen provides recommendations for governments to successfully navigate mining communities through their transition toward non-mining economies. Based on past experiences with industrial transitions, she suggests that a three-step approach centred around stakeholder collaboration could be the most effective way forward. This approach combines early planning, local-based solutions, and targeted investments aimed at fostering economic and workforce transformation. This comment article was published in Nature Energy.

 

Dr Kamila Svobodova, Marie Skłodowska-Curie Research Fellow at the University of Göttingen, argues that, in practice, governments struggle to truly engage mining communities in both legislation and action. Even the more successful, often deemed exemplary, transitions failed to follow the principles of open and just participation or invest enough time in the process. Early discussions about how the future will look following closure help to build trust and relationships with communities. A combination of bottom-up and top-down approaches engages people at all levels. This ensures that the local context is understood and targeted specifically. It also establishes networks for collaboration during the transition. Effective coordination of investments toward mining communities, including funding to implement measures to support workers, seed new industries, support innovations, and enhance essential services in urban centres, proved to be successful in the past.

 

“To ensure energy security, it’s essential for governments to recognize the profound transformation that residents of mining communities experience when they shift away from mining,” Svobodova explains. “Neglecting these communities, their inherent strength of mining identity and unity, could lead to social and economic instability, potentially affecting the overall national energy infrastructure.”

 

Moving toward closure and consequently away from mining is not an easy or short journey. “It is essential that governments recognize that the transition takes time, and persistence is essential for success,” says Svoboda. “They should openly communicate their strategies, ensuring communities and other stakeholders are well-informed and engaged. Building trust and providing guidance helps residents navigate the uncertainties associated with transitions. By embracing the three-step approach that centers around stakeholder engagement, governments can prioritize equitable and just outcomes when navigating mining transitions as part of their energy security strategies.”

 

Original publication: Svobodova, K., “Navigating community transitions away from mining,” Comment article in Nature Energy 2023. DOI: 10.1038/s41560-023-01359-9. Full text available here: https://rdcu.be/dnmU3 

 

Contact:

Dr Kamila Svobodova

University of Göttingen

Department of Agricultural Economics and Rural Development

Platz der Göttinger Sieben 5, 37073 Göttingen, Germany

kamila.svobodova@uni-goettingen.de

 


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Government

Turley: Four Biden Impeachment Articles & What The House Will Need To Prove

Turley: Four Biden Impeachment Articles & What The House Will Need To Prove

Authored by Jonathan Turley,

With the commencement of the…

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Turley: Four Biden Impeachment Articles & What The House Will Need To Prove

Authored by Jonathan Turley,

With the commencement of the impeachment inquiry into the conduct of President Joe Biden, three House committees will now pursue key linkages between the president and the massive influence peddling operation run by his son Hunter and brother James.

The impeachment inquiry should allow the House to finally acquire long-sought records of Hunter, James, and Joe Biden, as well as to pursue witnesses involved in their dealings.

testified this week at the first hearing of the impeachment inquiry on the constitutional standards and practices in moving forward in the investigation. In my view, there is ample justification for an impeachment inquiry. If these allegations are established, they would clearly constitute impeachable offenses. I listed ten of those facts in my testimony that alone were sufficient to move forward with this inquiry.

I was criticized by both the left and the right for the testimony. 

Steven Bannon and others were upset that I did not believe that the basis for impeachment had already been established in the first hearing of the inquiry.

Others were angry that I supported the House efforts to resolve these questions of public corruption.

Without prejudging that evidence, there are four obvious potential articles of impeachment that have been raised in recent disclosures and sworn statements:

  1. bribery,

  2. conspiracy,

  3. obstruction, and

  4. abuse of power.

Bribery is the second impeachable act listed under Article II. The allegation that the President received a bribe worth millions was documented on a FD-1023 form by a trusted FBI source who was paid a significant amount of money by the government. There remain many details that would have to be confirmed in order to turn such an allegation into an article of impeachment.

Yet three facts are now unassailable.

First, Biden has lied about key facts related to these foreign dealings, including false statements flagged by the Washington Post.

Second, the president was indeed the focus of a corrupt multimillion-dollar influence peddling scheme.

Third, Biden may have benefitted from this corruption through millions of dollars sent to his family as well as more direct benefit to Joe and Jill Biden.

What must be established is the President’s knowledge of or participation in this corrupt scheme. The House now has confirmed over 20 calls made to meetings and dinners with these foreign clients. It has confirmation of visits to the White House and dinners and events attended by Joe Biden. It also has confirmation of trips on Air Force II by Hunter to facilitate these deals, as well as payments where the President’s Delaware home address was used as late as 2019 for transfers from China.

The most serious allegations concern reported Washington calls or meetings by Hunter at the behest of these foreign figures. At least one of those calls concerned the removal or isolation of a Ukrainian prosecutor investigating Burisma, an energy company paying Hunter as a board member. A few days later, Biden withheld a billion dollars in an approved loan to Ukrainian in order to force the firing of the prosecutor.

The House will need to strengthen the nexus with the president in seeking firsthand accounts of these meetings, calls, and transfers.

However, there is one thing that the House does not have to do. While there are references to Joe Biden receiving money from Hunter and other benefits (including a proposed ten percent from one of these foreign deals), he has already been shown to have benefited from these transfers.

There is a false narrative being pushed by both politicians and pundits that there is no basis for an inquiry, let alone an impeachment, unless a direct payment or gift can be shown to Joe Biden. That would certainly strengthen the case politically, but it is not essential legally. Even in criminal cases subject to the highest standard, payments to family members can be treated as benefits to a principal actor. Direct benefits can further strengthen articles of impeachment, but they would not be a prerequisite for such an action.

For example, in Ryan v. United States, the Seventh Circuit U.S. Court of Appeals upheld the conviction of George Ryan, formerly Secretary of State and then governor of Illinois, partly on account of benefits paid to his family, including the hiring of a band at his daughter’s wedding and other “undisclosed financial benefits to him and his family and to his friends.” Criminal cases can indeed be built on a “stream of benefits” running to the politician in question, his family, or his friends.

That is also true of past impeachments. I served as lead counsel in the last judicial impeachment tried before the Senate. My client, Judge G. Thomas Porteous, had been impeached by the House for, among other things, benefits received by his children, including gifts related to a wedding.

One of the jurors in the trial was Sen. Robert Menendez (D-N.J.), who voted to convict and remove Porteous. Menendez is now charged with accepting gifts of vastly greater value in the recent corruption indictment.

The similarities between the Menendez and Biden controversies are noteworthy, in everything from the types of gifts to the counsel representing the accused.  The Menendez indictment includes conspiracy charges for honest services fraud, the use of office to serve personal rather the public interests. It also includes extortion under color of official right under 18 U.S.C. 1951. (The Hobbs Act allows for a charge of extortion without a threat of violence but rather the use of official authority.)

Courts have held that conspiracy charges do not require the defendant to be involved in all (or even most) aspects of the planning for a bribe or denial of honest services. Thus, a conspirator does not have to participate “in every overt act or know all the details to be charged as a member of the conspiracy.”

Menendez’s case shows that the Biden Administration is prosecuting individuals under the same type of public corruption that this impeachment inquiry is supposed to prove. The U.S. has long declared influence peddling to be a form of public corruption and signed international conventions to combat precisely this type of corruption around the world.

This impeachment inquiry is going forward. The House just issued subpoenas on Friday for the financial records of both Hunter and James Biden. The public could soon have answers to some of these questions. Madison called impeachment “indispensable…for defending the community” against such corruption. The inquiry itself is an assurance that, wherever this evidence may lead, the House can now follow.

Tyler Durden Mon, 10/02/2023 - 15:00

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