The stock market's having one hell of an April—and not in a good way. The Dow is sliding toward what could be its worst April performance since 1932, a comparison that's making even seasoned market veterans shift uncomfortably in their ergonomic chairs.
Yeah, that 1932. Hoover Administration. Great Depression. Breadlines. The whole catastrophic enchilada.
I've been watching markets long enough to know when something feels off, and boy, does this feel off. Just months ago, the champagne was practically on ice as investors anticipated a series of Fed rate cuts that would send stocks soaring. Now? That optimism has curdled faster than milk left out in July.
What we're witnessing is essentially a massive vote of "no confidence" from investors. The market—that neurotic collective intelligence that processes information through the lens of human emotion as much as cold hard data—has suddenly decided the economic story isn't as rosy as everyone thought.
Inflation's staying stickier than expected. Earnings reports? Meh at best. And those rate cuts everyone was banking on? They're retreating further into the future with each new economic release.
"The market was priced for perfection," a hedge fund manager told me yesterday (while looking like he hadn't slept in days). "And perfection... well, perfection rarely happens in economics."
Look, markets swing from excessive optimism to excessive pessimism—it's what they do. The pendulum rarely stops at "reasonable assessment." Right now, that pendulum is swinging hard toward the doom-and-gloom side of the spectrum.
What makes this particularly noteworthy (or worrying, depending on your portfolio) is that April typically treats investors kindly. It's traditionally one of the stronger months for stocks—part of the "good times" before that old Wall Street adage "Sell in May and go away" kicks in. For April to be this brutal suggests something fundamental might be shifting.
Is this the beginning of a prolonged downturn? I'm not convinced.
The labor market's still strong. Corporate America isn't exactly hurting. And consumers—despite complaining about prices—keep spending money like there's no tomorrow.
But those 1932 comparisons? They're enough to make anyone's stomach churn a bit. The 1930s weren't exactly a golden era for...well, anyone.
(A quick aside—I was talking with my grandfather before he passed, and his stories about that era were harrowing. The psychological scars of economic depression run deeper than any chart or graph can show.)
The Fed finds itself in what can only be described as a pickle. Inflation remains above target while employment stays strong, and the traditional relationship between these factors seems to have broken down. It's like they're flying a plane using a manual for a different aircraft altogether. Not ideal.
For investors watching their portfolios shrink, what's the move? Panic selling rarely serves anyone well. Neither does burying your head in the sand. A watchful patience—uncomfortable as it might be—probably makes the most sense.
Markets are cyclical, always have been. They overshoot in both directions. Nobody—not your financial advisor, not CNBC pundits, certainly not me—can predict exactly when the tide will turn.
If April 2023 really does end up earning that dubious 1932 comparison... well, at least you'll have something to tell your grandkids about someday. "Back when I was your age, we had a market correction that made Herbert Hoover look up from his grave and say 'that seems familiar'..."
Maybe not the most comforting thought. But then again, comfort isn't what markets are designed to provide.
