As October begins to wane, we saw the market rebound sharply from September lulls and 3rd Quarter earnings come in strong across the board. Investors are watching this market climb up a wall of worry and shrug off all the macro events that seemed poised to derail it. The latest worry of the day is the US Economy entering a period of Stagflation. Stagflation (or recession-inflation) is a period of rising inflation coupled with slow economic growth and rising unemployment. Inflation tends to go hand and hand with a hot and growing economy, not a slowing one.
The world works by adhering to simple laws and principles that are universal, with one of those laws being Gravity. Gravity is interesting as it is both a law as well as a theory. Isaac Newton created the Law of Gravity in 1687 and Albert Einstein published his theory on general relativity in 1915.
As markets continue to rise there is still a sense of foreboding that we are just waiting for the bottom to drop out. Sell and May and go away? Or keep calm and carry on? Some believe this market is like the story of Icarus who flew too high, and consequently crashed and drowns.
As markets continue to rise there is still a sense of foreboding that we are just waiting for the bottom to drop out. Sell and May and go away? Or keep calm and carry on? Some believe this market is like the story of Icarus who flew too high, and consequently crashed and drowns.
Patience is a virtue most of us struggle with daily. Sitting in traffic, getting in the slow checkout line at the grocery store, or even waiting for a slow website to load can now frustrate us beyond belief. Our world is moving faster on so many levels that it’s difficult to fight our expectations for instant gratification. This desire for instant gratification has trickled into the investment world recently.
How does a bull market die? Conventional wisdom says that it is not by old age, its policy error. Killing off a bull market is harder than one may think. Market history says an average bull market lasts anywhere from four to eleven years, and those with strong first year gains have been longer bull market eras.
March has always been a month of transition; in like a Lion, out like a Lamb. This rings true for both the weather and the markets. This year the markets are centering in on interest rates and the yield curve as the main catalyst for continued equity market gains or a signal to flip from Risk-On to Risk-Off.
Maybe it is the grey weather and February doldrums, but it is difficult to shake the feeling of impending doom these days. Waking up in the morning can feel like Groundhog Day: check the Covid stats, read about whatever terrible political issue is happening, and look at the markets; is today going to be manic or depressed?
As we approach Election Day it feels more like Apollo 13 approaching re-entry. Events have occurred leaving us vulnerable and wounded, limping duct-taped together towards the horizon.
