Markets: What A Two-Month Long Ride

Interest rate worries ran the show (as it should). The 10-year note reached 4.60%, with eyes at 5%, a level where risky markets would not have liked, not one bit (my opinion, and I was not alone). Radar turned to high, almost instantly.

Powell to the Rescue

What the Federal Reserve did was not news. What Powell said was, he shelved the notion of interest rate hikes, a thought that I did not really consider to be a high-probability outcome, but someone out there must have.

Ignorance Is (Never) Bliss

You might read that people should just ignore. For me, that makes no sense whatsoever. It is impractical. Why? No one said the jitters could not have gotten worse. The fact that it passed without further turmoil is randomness. What if Powell said “we may need to consider interest rate hikes if inflation does not subside?” Equities could’ve dropped another 5-10%, almost immediately.

Put it this way: if you were that certain that it would pass, then you would’ve simply done this:

  • sold everything else,

  • took out loans to the absolute maximum, and

  • bought the riskiest securities on the planet

  • withdraw all your money from every market because you don’t need to think about money ever again.

So, for someone to say “I knew it was nothing…” » the person that says this is being intellectually inconsistent (which is my nice way of saying that he is a Monday Morning Quarterback, which makes that person talking like his pants are on fire).

“Ignorance is bliss” is the convenient phrase used by those that are underinformed and worse, defending that position. That person needs to be MORE observant, not less.

What Is The Bottom Line?

Ugh, we live in a world where the easy answer is handed over in 3 words. So here it is, in two words: “That depends.” It depends on:

  • How dependent you are on markets to pay for stuff

  • How old you are, and how healthy you are, because that determines how long you need to plan. This is another way of changing/modifying your timeframe.

  • What is your mental state when faced with losses, versus your happiness when faced with gains in the equal and opposite direction. If they are exactly equal and opposite to one another, that makes you a robot, inhuman.

The bottom line is that once you consider all of this, then you might need a shift in investment strategy. Or not.

Up Next, Tomorrow: Nvidia Reports And The Markets Will Be Carefully Watching