A Laetare Sunday Stock Market

It's Lent, specifically the 4th Sunday of Lent. The 4th Sunday of Lent is known as Laetare Sunday. Instead of the typical purple Lenten vestments, the priest wears rose-colored vestments. (Not pink, rose-colored.) These are worn only two times during the year.

What does this have to do with the stock market?

Well, let's start with the rose-colored vestments. The unusually festive color of the vestments contrasts with the somber purple we have seen throughout Lent. They immediately give a kind of visual cue to us as the priest enters the sanctuary. Something is different. 

Shortly after, the priest prays or, in the case of a sung Mass, intones the words of the Introit.

"Rejoice, O Jerusalem, and come together all you that love her; rejoice with joy, you that have been in sorrow: that you may exult and be filled from the breast of your consolation. Ps. 121, 1. I rejoiced at the things that were said to me: We shall go into the house of the Lord."

Again, something is different here. The typically muted penitential tone of the Lenten liturgy has been replaced with something bright and hopeful. Our Lenten discipline or special prayers and fasting has been relaxed somewhat. Laetare Sunday brings us a kind of island of relief. 

It's only for a day. On Monday we recommence with the discipline to which we've committed for the forty days of Lent, whatever that might be. Our mood shifts back to the purple somber. This brief respite has boosted our spirits and replenished our determination to persist in our prayer and penance right on through Holy Week and the recollection of the Passion and Death of Jesus Christ.

Now for the stock market.

We're in a kind of Laetare Sunday these recent days. Stocks were brutalized beginning in January. The NASDAQ dropped hardest, but all the indices took the blows that come with the initial stages of a Bear Market. (And yes, we do think that's what we've entered - a Bear Market.) Now comes some relief.

Our Laetare break won't last forever, maybe not much more than a few weeks or months. The Bear, taking a rest from wreaking havoc on stocks, rests a bit. We'll hear his growl soon. When we do, another round of pain begins. If we're holding the stocks that performed so well during that Bull Market rise since 2009, we'll watch them whither. 

During Lent, we hope that our prayer and penance strengthens us to reduce the surfeit of the spiritual disorder of our sins. If part of our penance is fasting, we may even lose a few pounds here and there. But the reducing we'll see in this Bear Market won't come by choice - unless we've taken measures to preserve some of those gains we enjoyed. While there are many ways to do so, it's always a surprise to find how few manage well during Bear Markets. Why is that?

Perhaps it comes down to the typical progression of most Bear Markets. The prices of stocks don't just drop suddenly once and for all. They drop, revive, drop, revive, and so on. Coming off the Euphoria of a powerful Bull Market, the first havoc the Bear wreaks finds us feeling anxious. That's phase 1. Subsequent to that first phase comes Denial - phase 2. Then follows fear, despair, panic, capitulation, leading to a pervasive discouragement. We're done with stocks. 

We may be in phase 2 right now. The recent rise in stocks will feed that. Bear? What Bear? 

We'll soon see what Bear.

Unless, of course, we get a drop like we had in 1973 -74. A steep, shocking drop, with a powerful counter-trend (albeit in the Dow - the S&P was apparently too shocked to rise much) followed by a sickening devastating relentless plunge that saw stocks fall around 50% with the additional loss of roughly 25% due to inflation. (That was when we last saw inflation like we're having now.)

Either way, I prefer Lent. It comes every year, on a day we know in advance, and always lasts 40 days. You can bet on it. Our special penance, even if it includes some stiff fasting, won't last forever.

The arrival and length of the Bear is unknown. Now that this Bear has arrived, we still don't know its length. The severity of the losses: unknown. It typically comes when least expected. It last longer and hits us harder, certainly more than we wish, likely more than we had ever imagined. 

For now, I'm going to enjoy Laetare Sunday and the respite and relief it brings. Tomorrow it's back to Lent. 

As for this Bear Market respite, we could only wish it were a true Laetare Sunday. Laetare Sunday points us to Easter. We know exactly when that will come. This Bear Market Laetare points only to more Bear. And we don't know when Easter will come again.