The Means AND the Ends

A colleague mentioned the other day that investing in the current stock and bond markets felt a bit like being in purgatory. And you know what? It does seem a little like purgatory, where souls are believed to await their final fate.

Just as purgatory is often depicted as a place of reflection and penance, investors in a challenging market environment undergo emotional turmoil. Seeing investments not yielding expected returns, or being stuck in positions with no clear exit strategy, can be mentally exhausting.

Admittedly, comparing anything to purgatory is not my preferred analogy, but I see his point.

After a smallish rally earlier this year, the stock market has turned down about 8% over just the last two months leaving us with a tiny sliver of profit so far this year and it seems like nothing is happening now, nor will it anytime soon.

And the bond market? Fuhgeddaboudit.

But here’s my preferred analogy:

Imagine that you and I are in a sailboat together. She’s a beaut’; sleek, polished, and built from years of study and analysis of the science of sailing.

We’ve launched her and we’re all together in the boat. We’ve got the sails trimmed, the keel is at just the right depth, and the rudder’s set in exactly the right direction.

But, there’s no wind. And we can’t make it windy either. We’re just stuck staring at each other, waiting for something to happen.

So maybe we try to jiggle things about by changing the configuration of the boat and trying some other different things.

But that’s not the problem. The problem is the wind, or more accurately the lack of it. No amount of adjusting on our boat is going to make the wind blow.

The risk is that during our jiggling and retrimming, the wind starts to blow and we find ourselves out of position and unable to take advantage of our newfound wind. Or worse yet, we’re so out of position a strong gust capsizes us.

Better just to wait in the calm, staring at each other, knowing the wind will blow again someday.

It always does.

~ Jeff

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Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change.

Information in this newsletter does not involve the rendering of personalized investment advice. A professional advisor (such as myself) should be consulted before implementing any of the options presented. No content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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Roger Weller and I have known each other for about a couple of decades. For the past 10 or 15 years, I’ve been fortunate enough to have Roger as an advisor with JRSCM. He takes care of folks all up and down the Atlantic coast and has oodles of experience and knowledge of and about the business of planning and investing.

So, his comments are interesting and relevant to today’s market and drip of wisdom.

Hi everyone:

It’s been a while since we’ve discussed recent market activities with you, so we thought that you might like ourthoughts on the subject as recent markets have been so volatile lately. Remember our recent article on “Fear and Greed”? Yup, many investors get nervous and sell at market bottoms only to realize later that theyshould’ve been buying as markets generally go higher over time.

Old Fashioned Correction

The volatility you’ve been experiencing lately is really an old-fashioned correction. By definition, a correction is a 10% reduction to account balances after a solid increase was experienced in the markets.

Last summer, we had that increase that started in July and continued into the middle of August. A correction is a healthy situation as investors begin buying again once they realize that bargains are available.

Auto Strike

While its debatable as to whether a strike is good or bad, the economy can be affected by a decline in activity and Wall Street worries that such can disrupt the value of securities. The reduction in auto production will likely have a brief impact on investments, but long term our investments generally trend higher.

Potential Government Shut Down

Governmental legislative risk nearly always puts a drag on our portfolios, but once resolved, our markets heal rather quickly. Memories are most always short term, so selling should not be an option. Please don’t pay too much attention to the media as they just love to use a potential shut down to scare folks ….. just ignore them.

Interest Rate and Inflation Risks

Interest rates and inflation are like twins; one serves the other. The Fed just paused interest rates for the
second time since beginning their fight against inflation mainly because inflation has been slowing. So, despite their recent comments, the Fed is winning their war against inflation. But they still like to keep an oar in the water, so the mere thought of another interest rate increase caused the markets to drop again.

Summary

Please remember that the absolute worst time in the markets over the last 75 years has been the August –
October period, but the absolute best time has been the November – January period. Despite how you might feel about the markets today, the next few months should reflect much better performance
given the following:

• Companies have reported increasing sales and earnings all this year.
• People are still spending money on consumer goods.
• Interest rates have likely stabilized, which means inflation will be lower.
• All the above tends to cause markets to improve over time.

Thanks for trusting us with your business. It’s truly been an honor serving you.

~Roger Weller

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