As the stock market goes through the Dusty Springfield phase where we’re all “wishing and hoping” that the worst of the coronavirus is behind us and that the closures and lockdowns will soon be eased off, a big super fund, Hostplus, has made it harder to switch to cash and get redemptions!

This will shock normal people but this draconian decision by one of the country’s biggest super funds is, in a paternal or maternal way, a good thing, because worried, uninformed super members might be panicking themselves into a poorer future by getting out of the stock market for too long.

And our big move up yesterday and Wall Street’s surge overnight has underlined how even professionals can get it wrong when they try and time the market. On my Switzer TV Investing programme released last night, I interviewed a number of professionals, brokers and fund managers who are so negative that they haven’t participated in the comeback of the market, which I’ll show you below.

S&P/ASX 200

Now my experts might be on the money that it’s too early to get positive on stocks just because the virus news is getting better here in Australia. Italy, Spain and even US data is adding to positivity.

This chart from Fidelity shows what happens when you try to time the market and you get it wrong.

Looking at $10,000 invested in the stock market between 2004 and 2020, if you miss the 10 best days, which can even surprise pros, you end up with $24,691 rather than the $39,524 you would’ve had if you’d done nothing!

It’s why experts tell amateurs that you’re better off having time in the market rather than trying to time it. Of course, if you’re good at timing then you’re in a very small minority, so I’m not talking to you.

As I write, the Dow was set to close up over 7.7% r 1,627 points! And we’re set to go higher today after a big 4.3% rise yesterday. And it’s on better-than-hoped for news on the Coronavirus. And while I’m very happy about this, the “wishing and hoping” still has a long way to run because we need to know when we’ll all get out of ‘house jail’ and when we can start swimming, dining and hanging out together.

That’s going to be the next critical leg up for the economy and the stock market and I’m going to have to see more evidence of less volatility in this stock market before I can say that we can trust these moves higher for stocks.

I’d like to say that “I’m a believer” that the worst is over and stocks will head higher on better virus news. But when we’ll get back to normalcy will become the next big worry for the stock market. This reality could drive stocks up or down. I hope the NRL footie people know more than the rest of us.

News over the weekend says they want to restart their competition by June 1, which looks like a big call. My experts say politicians will try to hold out letting us get back to normal because of the fear of a second wave of virus outbreaks.

Against that, there’s a growing force of influencers asking if the cure is costing more than the cost of the Coronavirus. This will put pressure on politicians to release us early but that could come back to bite us, and them, politically.

Also Fed work on the 1918 Spanish flu showed the places where the social distancing and other measures were kept in place the longest, ended up being the places that grew the most after the flu threat died!

If we’re kept in captivity longer than expected, I think stocks will fall in the short term but they could surge higher for longer, if we’re forced to cop this current misery for more than what we want!

I think you can see why economics is called the dismal science!

So what do I think about Hostplus’s decision to stop members easily deciding what to do with their money?

From an investment and wealth point of view, I’d prefer the members kept their money in the fund and preferably not in cash because timing is so hard. However, a lot of Hostplus members are in lower paid hospitality occupations, so they’re wanting the $20,000 cash redemptions to get by. The super fund would never have expected this big potential outflow experience.

But there’s another problem with industry funds like Hostplus. You see, they invest in real assets like buildings and developments. And these aren’t valued daily like shares on the stock market, so we’re not sure exactly what the value of their assets are. Also, it’s harder to sell a building to get cash to give members their money. And that’s why Hostplus has changed its fine print to say that it can put a freeze on cash redemptions and members getting out of, say the balance fund option, into the cash option.

As the Treasurer has told us, these are extraordinary times and this is an extraordinary action that could see a future Government reduce industry super funds investing in assets that aren’t easily converted into cash.

It’s an interesting development that a super fund might force its members to stay invested in the market. And given the rebound in stocks, it has been a good idea. However, if this virus means we end up being locked up longer than expected, the stock market could sell off again and super members, who were refused the right to go to cash, will have a genuine reason to hate Hostplus or any fund that keeps them exposed to stocks.

Like me, the people who run Hostplus will be at one with Dusty Springfield, wishing and hoping that the worst of this market crash is behind us.

By the way, the Dow Jones Index lost 37% at the start of this Coronavirus crash, which put the stock market into a bear market. A 20% fall in stocks means a bear market prevails. But now the Dow is up 21% since the March 23 low, so are we moving into a bull market?

The bottom line is that a switch to cash in the USA might have lost 37% on the fall if they were invested in the Dow Jones Index and because they are in cash, they’ve missed out on a 21% bounce!

Did I say timing the market is hard?