After four down weeks sending the S&P 500 index down to 6500, investors are looking for a life line.
The only real answer would be for the Iran situation find some sort of resolution.
It appears that it is all up to the President.
Indications early this week are that he may have had enough of high fuel prices and would be willing to back off.
Any such talk would send oil prices down and the fears of raging inflation on the back burner for now.
What won’t get addressed however is the ever-increasing federal debt.
This incursion in Iran will only contribute.
I am not picking sides on the Iran issue except that it cost a lot of money to go to war just as it cost a lot of money to try and resolve social issues.
One side sees the answer of raising taxes and the other leans toward pushing the economy forward.
I think there is actually room for both with a substantial reduction in spending.
The latter will only happen when we have driven ourselves into a financial crisis and legislators are forced to reduce spending.
I don’t know if you have been watching but the flight to safety in precious metals isn’t working out lately.
After gold climbed to $5,000 an ounce it dropped back near $4,000.
That is almost a bear market for that investment strategy in one of the most unsettling times.
What does that mean?
Maybe we are being taught once again that things only go up so much before reality sets in, no matter the conditions.
Moreover, there is no perfect investment.
Remember how Bitcoin was going to climb way past $100,000 already.
Another great prediction bit the dust.
If you get nothing from this column, there is no perfect solution and this isn’t easy.
I did see an article that pointed out that heavily managed accounts tend to do worse in down markets.
It simply is saying that actively managed accounts can be a problem especially in down markets.
It was also saying that sitting on your hands in market corrections is better than the alternative.
It goes back to what Buffet touted of just keep it simple and invest in the S&P 500 index.
One of the lowest cost ETFs is sponsored by Vanguard. I use it for my grandchildren as they have fairly long investment horizon.
I would encourage those of you with the means to investigate the Trump accounts coming available this summer.
The government will stake you to the first $1,000 and you can add up to $5,000 per year to the account. The money grows taxed deferred.
I would suggest this is the perfect situation to place that investment in Buffet’s suggested investment mentioned above.
As with all retirement accounts, there is a limit, but anything is better than not doing it at all.
The power of the markets and compounding seem small at first until you wake up and realize it is ten years later.
At my vintage, it happens so fast it is amazing.
I was interested in a 60 Minutes story about MP Materials, which mines rare-earth minerals.
Of interest was how China has cornered the market in rare-earth minerals.
They produce about 90% of those minerals worldwide.
This is why understanding economics and politics are so important.
They also discussed the ship building business that has almost become extinct in the US.
I am not one to argue against globalization, but you do have to understand there is always a cost in this zero sum world.
In an aside, it was again noted at the lack of skilled workers that are trained welders and pipe fitters.
The next generation is going to have to come to the realization that white collar jobs may not be the answer.
I know these skilled service sector jobs may not be glamorous but they can way more than pay the rent.
All I am trying to convey this week is that what think may be right could be in fact wrong. It is important to constantly question what we are doing.
This whole idea that we know the truth is just being lazy. We are on a constant journey of discovery.
There are some basic rules but the game is changing almost faster than we can keep up.
If you don’t change with it you get left behind.
Just because an idea worked before does not mean it will work forever. I believe in change because it brings opportunity.
It is not something to fear but to embrace.
