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Woe be unto the disciples of stock market panic

Published on 24 March 2020

Yet again, the country is worshipping the golden calf that rules our wealth: the stock market. Forgive me if I try and exit from the back pew.

First, some back history. It was October 1987, and I was a high school sophomore. During the last class of the day, my world history teacher, in a rather alarming tone, told us we might be entering another Great Depression.

His despair came from that day’s 700-pound drop of the stock market. In one session, investors saw the Dow Jones Industrial Average lose 22.6% of its value. It was a historic plunge, exceeding the crash of 1929. It hasn’t been seen ever since – not even after Sept. 11 or after the housing crash of 2008.

Black Monday, as it was called, sparked a regulatory change in stock market trading. Oversight agencies created what’s now known as a circuit breaker, or a temporary halt that forces traders to stop overreaction that could wreck the market. Circuit breakers have kicked in just twice since 1987. The first happened in 1997, and then again on March 9, 2020 – just in time for this issue’s deadline.

So forgive me if I feel like I’m back in Mr. Randall’s history class. Looking back, I spent the rest of that class trying to remember Grandma’s three steps for how to survive another Great Depression – buy a goat, plant beans and raise rabbits.

I’m no economist, but when dangers such as the coronavirus throw markets into uncertainty, I kind of wish there were circuit breakers happening more often. The effusive clamor over rallies, sell-offs, bears, bulls and black swans just adds to the noise. The wailing poisons Americans’ trust in our financial system. You can’t blame them when the 24-hour news cycle turns any event into the reason for that day’s volatility.

Economists say you can’t avoid paying attention to stock and commodity trading. The invisible hand guides markets better than government regulation and dictates all that we buy and sell from the scales of supply and demand. I get it.

But for a farmer or rancher, the chaos of the stock market probably feels like a circus that’s happening in another town. It’s not worth the hassle when there are calves to tag, fields to plant, a youth softball team to coach or a truck battery that needs to be charged.

Yes, we all have to watch the CME index for where the calves are going and for how much the corn will be sold. But perspective and patience play a large role in ag production, and they are clearly in short supply with players in the arena of finance, media and politics.

It could be that 2020 turns into a year of inconvenience, confusion, cancellation, unrest and uncertainty, or maybe worse. As for those false prophets of economic doom, I’m thoroughly washing my hands of them – especially since there isn’t any more sanitizer on the shelves.  end mark

David Cooper
  • David Cooper

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