The market is overdue for a correction, the last one was in the fourth quarter of 2018, and it could be that the Coronavirus is simply the excuse. However, the resurgence of Bernie Sanders adds more credence to the correction case.

Dogma assumes that Bernie wouldn’t have a chance against Trump in the general. All of you probably know that one can wager on who will win the presidential election. On Friday, betting odds of Sanders winning were about 3.5/1, or about 28.5%, or about the same chance as Royals slugger Hunter Dozier leaving the plate with a base hit. Today, another site had Trump as a 58.5% chance of winning, with Sanders at 22.7%. Point being, he most definitely has a chance.

Quantum has clients on both sides of the political fence, and I’m not here to opine on who would be better for our country. I am here to opine on what would happen to the stock market however, and if Sanders pulls it off, and especially if the Senate rides his coattails to a majority, the stock market is toast (toast is a relative term that I’ll seek to better define in the months ahead). I’m well aware that, historically, the market has done better under Democratic regimes than Republican. We’ve never had a president though that was unabashedly socialist so we’d be sailing in uncharted territory. My thought is that at least a few hundred Dow points of today’s meltdown is due to Sanders’s new front-runner status.

So what do we do about all this noise?

All is never lost. Most accounts today were down from 1.5-2% depending on your specific asset mix, while, as mentioned before, the S&P 500 was down about 3.3%. Gold had surged recently and still helped somewhat, but lagged in the middle of the day and while still positive, closed closer to the lows. Treasury bonds were strong, while corporate bonds were mostly flat.

All of you have been through corrections before, and know that the market is unpredictable. What looks like a certainty today can be an afterthought tomorrow. In the absence of a quick rebound though, I’ll be looking to selectively shed equity exposure, and make sure we really like what we keep. Gold, with today’s lukewarm performance, feels toppy right now so while it’s still the safe-haven, I’ll likely wait to add more. Same case for bonds. One can’t get too pessimistic though because the virus will eventually ebb and Sanders still has a long way to go.

I have a feeling that 2020 will be an interesting year.

As always, your questions and comments are welcome.