Again today. Right now it is a positive day for the dow. Up 400, following the biggest decline for stocks since the great crash of 1987. The russell has gone negative. Josh brown, its been one heck of a week. What are you thinking about today after weve given, you know we gave up almost all of the 1,000 point bump were still hanging on to a few hundred. So couple things. One of the points ive been trying to make on the show recently is that security selection is not going to be the answer to how much pain you are going take in a moment like this and that was proven this week. The xlu, which is the utility sector, which normally in any Market Correction is not going to be disastrous, was absolutely disastrous im not even giving you the draw down from the peek im just going tell you this week the xlu is down 19 there really has been nothing save and yesterday of course, historic day at 3 30 there was ant single green s p 500 stock. Security and selection has not mattered i come back to owning diversification, stocks and bonds, and only portfolio construction is going to be the answer the other thing i want to tell you is what i told my clients last night, in a letter which since we founded the firm ive only written one three times what i basically said was that without a doubt we know the headlines are going to get worse. They are not going to be better. Like this weekend they will be really bad and no one will be able to access their investments and move things around and they will be worse when we Start Testing more which hopefully happens. You want to see higher totals. I hate saying this but then you know there will be more tests what is the thing you need to ask in you need to ask at what point does the market stop reacting every time a negative headline comes out only then will you know were getting closer to the end and we are not there. Very good points. I want to read some commentary from the street today and get your reaction to it. To the point of how much downwards is really left, joe, in this market. Side is really li this market. Were now trading slightly below our downside case. And belief it is time to start adding to longterm equity risk for. And put money to work. The risk reward now appears more attractive i follow up with one more point. From howard marx in a letter from clients all great events begin in disconservate. One thing we know is there is great discomfort today what do you do with that what you do is think you begin to understand this is going to be a process which equities are going to be bottoming. Which that i think you begin to slowly buy into that market. Ask, can i endure another 1520 lower for the equities market. If you can, you then ask yourself, will i get that back and i believe the answer to that unequivocally is you will get that back. One of the most important conditions in the market to watch for scott is the positive correlations between oil, yields, the u. S. Dollar and equities in the last couple of days you are beginning to see those correlations break thats positive. You are seeing a lifting in yields the other thing is that understand this is as weve said a biological crisis that needs an Economic Activity freeze. You are beginning to get to that point. You are getting to a very cathartic moment i think it was very real and personal last night as i said to you before the show. No sports on television. Just kind of sitting around. Now everyone is understanding it i think you are going to be getting a muchneeded coordinated communication response from fiscal policy makers from global Central Banks and healthcare officials so if you can endure the potential for more downside, yes, absolutely. I believe you want to buy because you are going to get it back. All right so jenny barclays asks are we there yet . Are we near a bottom i think we got to be close. S p started the year turned them in house and stress tested with multiples. Goldman put out a call where we also said we accepted this point and earnings on the s p will be down five percent. If you take that start of the year cut it by 5 put a multiple where we bought at 2018 at 14 1 2 times. Cut a little off that. Were pretty near a bottom in the 2400 range on the s p 500. J. P. Morgan says were going to have a recession. In fact were having one going to get minus two this quarter and growth and minus three next so if that comes to fruition, does your calculus change . Not necessarily and this is where i go to one of my fair strategists who says we may have a recession this quarter, next quarter, the quarter after but then we could have serious rebound in the Fourth Quarter so if Something Like that plays out, the market is going anticipate 69 months in advance and could actually even if you dont have a recession statistically it is going feel like one. It is going feel like one you are going to have one and to jennys point, quickly, you are absolutely going to have industries that are already in recession and what feels like depressi depression, thats no matter what the National Data says. Across all regions across all industries. That is already in progress. It is not something that could happen and everyones expectations have to now factor that in. You cannot have the expectation that even if the stock market rebounds, the country is not going to be feeling it so keith banks. You have heard the commentary. Were going lean on you now for your years of expertise in the markets to tell us what you are thinking and what you think the average investor needs to think about and do today. Well look, scott. I think the biggest challenge right now for investors is were still dealing with what we call the known unknowns we dont know. And i think josh made some of this point, how much longer the coronavirus will be spreading you know what the number of additional cases will be what the death rate will be. Thats number one. Until we have a better feel for that we dont know what the impact on the global and u. S. Economy will be and until we know that, were not going to know really where the earns picture comes to pass. So i think we have to get more insight. We are in a bear market now. By, you know, technically speaking, and so i think it takes three or four months typically for a bear market to find a bottom. So i think were getting closer. But i think there is still some time to come and were going to have to pray to some bad news there are going to be more cases once the kits are available. I think companies have to still come out and adjust earns downwards and i think Economic Activity will still be adjusted downwards also were probably a bit early but i would also say you got to remember if you go from the 30s on, if you had missed the ten best performing days in each decade, your return over that period would have been 91 . Had you stayed in, your return would have been 15,000 . So trying to zig and zag in and out of the markets doesnt work. I wouldnt be selling. I may be holding off a bit to put money in but i wouldnt be trying to do the day trade game doesnt work. The majority of people should not be out there thinking they can play the zigs and zags the only place people with successfully do that miss the worse days and still do really well is probably on twitter. I know they are really good at it there i want to ask you about bear market rallies because i think this is the big danger for mom and pop if for Retail Investors who are important to everyone on wall street so when you think about lets say the 2000 to 2002 example we went back and looked. There were six separate bear market rallies the weakest one was 7 three of them went up 20 . And even having the bear market rallies you still ended up down 50 in the s p before the final bottom we are going to have those faceripping moments in the market going forward, even if it is recession, even if it is a bear market. But wouldnt you agree the big danger is taking those moments and getting all balled up as though the worst is over yeah, i agree, josh right now you have to fight the national Gravitational Force that comes from a market in this mode when it is zipping around, you almost feel like you are being pulled in to do something. And that is usually the worst time to in fact do something i agree with you you got to figure out how you start to get a sense of where we are from economic standpoint what are the translations of the earnings going to be and decide when are you getting close enough some underpins are forming whether you look at the yield on the s p versus the yield you know on the ten year treasury. The earnings risk premium looks good multiples coming down further. I think the stage is starting to get set but i think it is early for the play to begin. And i also want to see more from the fiscal policy standpoint and the Monetary Policy standpoint to make me feel better. S that the thing were still waiting. Still waiting on a lot to come to make people, jenny, better about getting in lot of the investors i talked to dont sound like they are ready to jump in i dont even know with a full foot thinking about a toe but even thats skiddish. I think the feeling is interesting and was so interesting and hit me strongly yesterday when the fed announced this huge passackage of money i think we just want information. We all know as investors, if you have information, if you have data you can trust, if you have stuff you can move on and you can move forward with respect to investors getting in one of the interesting things is because this happened so quick, i dont even think it is a question of getting in i think it is a question of not getting out. So i spent the last week and a half talking to every one of my clients personally and taking the time with them and the conversation has been very different than this conversation was in 2018 or 2008, 2009. Im down so much what. Can you co . And. There is a legitimate question as to whether at some point you are a longterm investor joe as some of the notes suggest today, that you do get in, even if you risk seeing more downside. So maybe it isnt the bottom but at some point you have to have that conversation with your financial advisor. How most are investing. Dollar cost average and retirement accounts. That is the lived experience of most of the viewers watching this program now are doing. Exactly at the top of the show what i said if you believe that you could endure another 15 lower, then you are going to be getting in at these levels. You are going to be looking apt a historic day yesterday where the market is down 10 and finding opportunities. I also understand the lot of the economic numbers in the coming quarter are going to look distorted. And they are not going to be actionable to trade off. If you would think the labor figures contract significantly you might not see those figures contract significantly if you get a fiscal response that shows you are going to get support for Small Business you might not see that such a great point. What would price again right now is freezing Economic Activity and thats actually the right behavior from a healthcare standpoint to mitigate this. So how much of the market has already been priced in in terms of understanding that Economic Activity is going slam shut . That is the question. You know how you know that is the right move to make by the way . Canceling south by southwest, pushing off coach la, no boston, st. Patricks day, on and on do you know how that is the right move because it would cost people billions of dollars. And anything that painful financially. No one is doing that for no reason so if were putting ourselves through that to joes point, you are going to see comps that look ridiculous almost like somebody splatter painted on the spreadsheet but those will be healed relatively quick they are not a forever situation. Keith banks, you do at some point have to make a calculus. Right . Everything is based on a calculus or a probability when you are buying or selling a where do you think things are going . Off the try and decide whether you think there is a quick snapback after the pain for maybe a couple of quarters and maybe more and nobody knows but you have to decide at some point whether you are going to buy the market or not. As to whether you are going to get a v shaped snapback or a longer period of time because the pain is going to be deeper than people think. Thats right, scott if you wait until you have too much certainty the market will have well discounted that and you would have missed it no one is going to pick the bottom you cant try to be clever enough to try do that. You have to take a longterm point of view. But look, what you got to do my guess will be it will be more like a u shaped recovery than v. Because i think there is going to be a lot of Additional Information coming out over the course of the next couple of three months a lot of it will not be very positive back to coronavirus cases. Back to Economic Data probably showing weaker than not. I dont think, were not forecasting recession yet at bank of america. But i think this is going to set the stage, especially as you begin to move money from fixed income into equities look what the s p has done the last 21 day. By the way it took us 21 days to go from a bull market to a bear market that is the fastest move ever. The last time even record. The closest was 1929 when it took 42 days to go from a bull to a bear. So i dont think were gonna it is nice to think were just going to bounce out of this. We have a lot more information to process some will be better. Some wont be so good but it is going set the stage to a point you can increase equity exposure and at some point safe to go back in the water. What do you make of a tremendous rebalance opportunity here if you have a portfolio coming in and at the end of the quarter you look and look and whoops, 52 in equities and 48 in fixed income and the need is going to be there just like the nature of the construct of the portfolio to rebalance. Yeah, no, it is a great point. And i think a lot of investors are looking at that right now because that is the math i think people would have begun that process already, joe. But i think whats happened up until yesterday there was no liquidity in fixed income. You couldnt transact in size if you needed as liquidity comes back and hopefully through the treasury actions that will be starting sooner not later i think you can begin to do that so to your point you need to make a lot of shifting from fixed to equity just to get back to a level where you thought you were, not to mention if valuation becomes much more compelling on the equity side to begin to make even more of a bet potentially. Because the other thing to think about. Assume we dont go into a deep recession. What this can do is almost reset the clock again. So we got a couple of down quarters, maybe. But if this is the pause that refreshes. Why cant we go where rates are, where inflation is and is going to be and why wouldnt we go on then for another few years and with valuation coming in and Monetary Policy, fiscal policy hopefully coming in powerful way this could create another very significant buying opportunity that people look back and say boy, i wish i i was fully in when that began to happen. Yeah, just the tricky part of that is paradoxically, stocks have come down 24 from highs. They actually could be more expensive today than they were three weeks ago depending on what window you are look at for earnings not over ten years but over thats key though. We know is nowhere near reality even though weve seen Constitutional Rights come down. Ebitda its interesting how far can you look as an investor. Keith, thank you so much for being with us. Talk to you again soon stay well. My pleasure. Thank you. See you soon. I know we will and goes to the point howard marks is making and people who say things like this and have tons of experience looking at markets that are disjointed and maybe become even more so. And maybe we look back a few months from now and okay, howard marks said this. All great investments begin in discomfort one thing we know is that there is great discomfort today. Put some reality to perhaps where we are, perspective on how to think in the big picture as the great ones tend to do and they do well or they wouldnt be considered great. I think that is a great observation. And again, i look at yesterday and just the amount of communication personally that i received from people wanting an explanation of hey, what went on today. I think yesterday for the very first time the fire alarms were really going on off. And i think even today the construct of the market lends itself to policy makers understanding this weekend they have to be aggressive in their communication. We came out. The dow was up 1200. That is not a good recipe. You actually want to see the dow fade today and get policy makers uncomfortable and not just looking at that tape and saying okay we think things are going to be okay put the pressure on them to communicate quick, do it this weekend. So lets drill it down to exactly what yall are doing as we speak because you guys are doing stuff in the market. G jenny. You sold General Mills. Yep. And bulked up existing positions using the selloff to your opportunity so where i went across the board the board portfolio by portfolio but on monday i sold General Mills, which has held up completely it faded the last couple days so thankfully i sold it monday and i used the cash from that bulk up positions and i know this is controversial like sab ra and dow. And lamar advertising, and the big billboards you see when you drive down the jersey turnpike you can look back to 08, 09. The revenues were down 12 1 2 and the stock is down 35 right now. So too me that was a good trade. What i did yesterday was i tee up positions and i didnt put that money to work i have another position already been sold, trading at its sale price. Like having cash so i put in the sales for that and got ready to buy two this mathi new positions. I think it is really to howard marks point you make Good Investments when you are at maximum discomfort i bought General Mills a in 2015 when i look back to the investments i made when i started they have always been at the point of the maximum discomfort and when i was buying things on monday, the word in my head was scared but courageous. I dont think ive heard anybody on this show today, you know, say buy stocks today now is the time to buy stocks today. You may pick some individual things here and there but nobody is sug