Direxion Daily S&P 500 Bear 3X Shares (SPXS)

[wadirum1]

Try this experiment in a spreadsheet. In the first cell, put $160 (as an approximation of the S&P 500 earnings). In later cells, let that grow by 5% per year for the next 30 or 40 years. Discount these back to the present using that 0.6% interest rate (or perhaps a higher rate if you think 0.6% is an aberration). Sum up the present discounted values of this earnings stream. That is what S&P should be worth, after applying a suitable risk factor.

THEN, once you have that model the way you want it, run it again, but this time with the first year or first two years having LOSSES of $320 (-$320 versus $160). That would be a pretty shocking scenario, and yet it barely affect the present discounted value of this earnings stream.

As soon as we start seeing the peak forming, we should see the markets rebound. Later on, they might crater again. And I'm really sick about what a house of cards our economy is and how badly the virus response has been mismanaged. But the oldest adage of them all is don't fight the Fed.