We remember late February well. The S&P 500 lost more than 30% between then and March. Closing down the U.S. economy had a tumultuous effect on investor confidence.
But the current market is taking hits from more than one direction. Let's talk about why stocks are down today, then what you can do to protect yourself.
Though we've seen a massive 60% correction since the March crash, we're looking at another potential crash before the year is over.
Momentum on the S&P 500 went negative today, the first time since February. The index is down 9.2%.
It might not come as a surprise to many investors, as governments and news outlets have repeatedly sounded alarms over a second wave. But the latest slowdown in the markets seems to reflect much more than that.
The Mark Twain quote comes to mind: "History doesn't repeat itself, but it often rhymes."
While we have some idea what to expect in a second wave of COVID-19, the current negative outlook carries more water than it did in March.
In addition to the February-March coronavirus dip, social and political unrest in the United States has gradually culminated into a heavier bearishness among investors.
Speculation makes for a volatile market. And there is still speculation, only that speculation is coupled with more outright preparation for chaos.
We'll start with the very latest bombshell to fluster the market.
Supreme Court Drama
Tensions have ramped up now that we are less than eight weeks ahead of the presidential election. The death of U.S. Supreme Court Justice Ruth Bader Ginsburg feeds the fire, with debate over whether or not U.S. President Donald Trump should appoint another in her place or wait until after the election.
Democrats have accused their colleagues across the aisle of hypocrisy, pointing to the time in 2016 when Republicans refused to vote on Obama's pre-election appointment of Merrick Garland.
On the other side, Republicans could view it as a duty to appoint a new judge, taking advantage of a moment where the GOP controls both the executive and legislative branches.
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President Trump and his administration are expected to choose their new prospect Friday or Saturday. That's when the markets could get even more of a shakeup.
Conflict arising from this dispute has led Democrats to threaten to "pack the court," meaning they would attempt to add more justices in retaliation.
This would set a controversial precedent. There have been just nine Supreme Court justices for over 150 years. Adding to that number has not been suggested since Franklin D. Roosevelt was in office.
Heated debates are not at all likely to subside over the next few weeks, adding to the "fear" picture. This overlays the already-present worries about coronavirus round two coming in the fall.
Another Wave of COVID-19
Two hospitals in Israel may stop accepting coronavirus in Israel. According to The Jerusalem Post, there are nearly 1,300 people currently hospitalized in Israel, with 643 in critical condition.
Since the outbreak, the country has counted over 188,000 cases and over 1,200 deaths, with 51,503 current infected cases.
The latest outbreak has forced two overwhelmed hospitals to cut down on services to better focus on COVID-19 patients.
Meanwhile, the United Kingdom debates another lockdown after getting its biggest COVID-19 case spike since May - more than 4,422.
The country suffered the worst death toll in Europe as its government flirted with a "herd immunity" strategy to curb the virus. More than 41,000 died.
Prime Minister Boris Johnson, who had been infected with the virus, said he does not want to lock the country down again but may need to institute certain measures to prevent the spread.
Meanwhile, the United States is bracing for a similar situation. With lockdowns lifted in some places and not others, the country faces a mixed bag ahead of the election.
Investors are also looking at what could be on the other side of Nov. 3. With tensions so high, many see potential for further social unrest and violence following the election.
This is where we get to what makes our current time unique. Many Americans feel their country has not been this politically unstable in several decades, some say even in their current lifetimes.
Many of those Americans are investors. And many of them are fleeing to safety right now...
Volatility May Skyrocket Again
There will always be profit opportunities in volatile markets, for those willing to take on risk. You should know, however, your risk is rising.
Investors focused solely on upside may have to reckon with several unknown forces if these negative catalysts have a compounding effect. It often seems like "mystery" does compound, because you simply "don't know what you don't know."
The only thing you do know, as fear compounds, is that the market is more volatile than it was before. Goldman Sachs Group Inc. (NYSE: GS) on Sept. 8 found a bearish pattern on the CBOE Volatility Index (VIX), or "Fear Index."
We had a rising market back then, about two weeks ago. The investment bank said rising stocks typically coincide with a fall in the VIX.
That did not happen from Sept. 4 to Sept. 8. The S&P 500 climbed 1.8%, and the VIX climbed 3.3%.
It seemed to subside in the ensuing days. But this was just the calm before the storm.
Goldman says election concerns have become a growing factor in pushing the VIX higher. The higher it goes, the more growth investors may have to lose should things not go their way.
According to Market Insider, the VIX will be "the market's best indicator of expected volatility in the next 30 days."
The VIX hit above 80 back when the market crashed in March. Anything above 30 is typically considered "high."
This is why investors are on edge at the moment and heading to steadier income investments.
Now, if you're wanting to protect yourself, here's what you can stock up on...
How to Invest When Stocks Are Down
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To protect yourself in a market with wild wings, there are investments that tend to appreciate when times get tough like this.
First thing that comes to mind is precious metals. The price of gold has increased 24% since the start of the year. And it's poised for only a steeper upward curve as stocks get more unreliable.
The easiest way to invest in gold is probably SPDR Gold Shares (NYSEArca: GLD). You're investing in the real thing, without the hassle of lugging your own bars, opening a vault, or anything like that. Simply go through your broker and pick up shares at $178 today.
The price of GLD is at an all-time high right now. With the current climate, there might not be time to "wait and see if it goes down" again.
While the majority of the stock market may fail you, there are still income stocks to invest in that have weathered thick and thin over the years.
AT&T Inc. (NYSE: T) has raised its dividend every year for the last 35 years. That span of time includes Black Monday, wars in the Middle East, the dot-com bubble, the 2008 financial crisis, and now the mess we're in today.
The stock currently pays a yield of 7.19.
Look for more shares of this one, and other dividend aristocrats like Johnson & Johnson (NYSE: JNJ) and Coca-Cola Co. (NYSE: KKO), both of which have increased dividends consecutively for nearly 60 years.
This will ensure you can squeeze the most out of the stock market without running to the hills just yet.
It would also help to shed some weight by dumping any "junk" stocks with potential to sink at the drop of a hat...
Are These "Toxic" Stocks Lurking in Your Portfolio?
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Our chief investment strategist is going live and shining a light on the specific stocks that should be nowhere near your portfolio.
In this fast-paced lightning round event, he'll also detail the stocks that every investor in the world should have in their portfolio right now.
This event could revolutionize how you make money this year. Watch now...
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.