Oof! Peak-to-trough, that was an -83% experience. The S&P 500’s was -50%.

As you know, truckloads of additional “stimulus” — the pending $1.9 trillion and I suspect another $3 trillion in infrastructure spending to follow — are heading the economy’s way, which I imagine the equity market will like. While the economy attempts to digest the massive dislocations, distortions (read that into inflation, interest rates, etc.), and so on that will no doubt come from the largest misallocation (as it’ll be govt directed) of resources we’ve ever seen.

“The Weber-Fechner law was developed by nineteenth-century psychologists Ernst Weber and Gustav Fechner to explain how subjects react to different physical stimuli.

In a series of experiments, Weber asked blindfolded men to hold weights. He would gradually add more weight to the weights the men were already holding, and the men were supposed to say when they felt an increase. It turned out that if a subject started out holding a small weight—just a few grams—he could tell when a few more grams were added. But if the subject started out with a larger weight, a few more grams wouldn’t be noticed.

It turned out that the smallest noticeable change was proportional to the starting weight. In other words, the psychological effect of a change in stimulus isn’t determined by the absolute magnitude of the change, but rather by its change relative to the starting point.”

I.e., the more the “stimulus” they pile on — atop what they’ve already piled on — the less positive bang they get for the proverbial buck. 

Of course it’s ultimately the longer-term negative bang(s) that trouble me.