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The Odds of a V-Shaped Recovery are Zero

By: Justice Clark Litle

1 day ago | Educational

There are multiple economic recovery scenarios, and varying expectations for how long each one could take. These scenarios are often described as letters of the alphabet. A “V-shaped” recovery is the best-case scenario. In a V-shaped recovery, the economy bounces back as quickly as it fell. V-shaped recoveries are fast and vigorous. A “U-shaped” recovery is the middle-of-the-road scenario. There…

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Self-Delusion is Not a Valid Coping Mechanism

By: Justice Clark Litle

7 days ago | Educational

Self-delusion is not a valid coping mechanism. In order to protect their capital, investors should remember this at all times. In the midst of a national crisis, citizens should remember it, too. Under normal conditions, optimism is a desirable trait. Optimists have a natural ability to enjoy life. Seeing the bright side of things is good for mental health, and…

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The Four Things America Needs to Beat the Pandemic (and Save the Economy, Too)

By: Justice Clark Litle

1 week ago | Educational

The coronavirus pandemic is not just one global crisis. It is actually two distinct crises rolled into one. On the one hand, there is a public health crisis. The speed of contagion combined with the severity of symptoms — for about 20% of those who catch the virus — leads to hospitals becoming overrun. At the same time, there is…

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Why Mental Capital is Just as Important as Financial Capital

By: Justice Clark Litle

1 week ago | Educational

Investment success depends on two types of capital, financial and mental. We are all familiar with financial capital. This is what goes in the brokerage account. Financial capital is what we use to buy and sell stocks, options, cryptocurrency, or whatever it is. But mental capital, though less well known, is just as important. Without mental capital, financial capital is…

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U.S. Treasury Bonds are the Most Important Market in the World Right Now

By: Justice Clark Litle

2 weeks ago | Educational

The most important market to watch right now might be 30-year U.S. Treasury Bonds, known as “long bonds.” Treasury bonds are supposed to rise in value when the stock market falls sharply. There isn’t a rule that requires this. Instead, it is just the normal way things work: When stocks drop heavily and across the board, capital flows out of…

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You Don’t Need to Hoard Food or Empty Your Bank Account

By: Justice Clark Litle

2 weeks ago | Educational

Thucydides, an Athenian general and historian from the fifth century B.C., has words of wisdom that apply well in a time of crisis. Here they are: “The bravest are surely those who have the clearest vision of what lies before them, glory and danger alike, and yet notwithstanding, go out to meet it.” Real courage means knowing the stakes and…

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The Next Two Weeks are on High Alert for Crash Risk

By: Justice Clark Litle

3 weeks ago | Educational

The next two weeks have heightened “crash risk” for various reasons. While vigilance is always a good idea, it makes sense to be even more vigilant over the next 10 trading days or so. “Hold on,” you might say, “Didn’t the market just crash?” After all, the Dow Jones industrial average saw its biggest single-day decline since 1987 this week….

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Why “Flattening the Curve” Means Sacrificing the Economy

By: Justice Clark Litle

3 weeks ago | Educational

Global financial markets are facing a stark reality this week. To save lives during an outbreak, the health care system has to function. To keep the system functional, the caseload has to spread out over time. To spread the caseload over time, the rate of early cases must be slowed. To slow the rate of early cases, the economy must…

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Why “Zero” is a Four-Letter Word for Financial Stocks

By: Justice Clark Litle

3 weeks ago | Educational

As the stock market dissolves into coronavirus chaos, three of the hardest-hit sectors have been energy, transports, and financials. The pain in energy and transports is relatively simple to understand. Crude oil prices have collapsed, wreaking havoc on anything fossil-fuel related. Travel and shipping demand has also collapsed, due to contagion fears and supply-chain disruptions, respectively. But what about financial…

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Reality Check: More than 80 Million Americans are Likely to be Infected

By: Justice Clark Litle

4 weeks ago | Educational

When crisis conditions are real, it is better to be informed than uninformed. The reality of a crisis situation is worth getting a handle on early — even if the truth is unpleasant. So let’s lay out some grim data points: More than 80 million Americans are likely to contract the coronavirus. Even by very optimistic estimates, more than 400,000…

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