We are now awaiting the Federal Reserve meeting on Wednesday to find out how much the Fed funds rate will be cut.
I would see it being a quarter of a point.
We can then get the election out of the way and have further cuts.
It seems that the data suggests that inflation is around 2.5% and unemployment is just above 4%.
There are serious concerns that the economy is slowing down.
You only have to look at the number of bankruptcies of late in the retail and the restaurant sector.
There are many reasons, but the biggest is that consumers are starting to cut back.
This makes the coming holiday season very important.
The consumer carried the heavy load after the pandemic essentially left the economy in a recession.
From recent data, there are arguments on both sides for less and more cuts.
I personally would favor a gradual approach.
We made a U-turn once again - much like in July - with the September drop almost recovered.
The earnings reports that sent the Mag 7 in retreat were not bad, but not exceptional.
This is what happens when you price to perfection.
It is also a product of the amount of leverage in the market.
Most of the movement these days is in the options trading sector. You can invest in the movement of 100 shares at a fraction of the price of owning.
Does this sound like gambling to you? It should because it is as close as it comes.
This is all wonderful until it doesn’t pay off. If you own the shares you probably should sell or at least hedge your position.
In options, there is no ability to wait out a dip.
So many of younger investors only know options and have lived in a bull market.
The vast majority weren’t even working 10 years ago.
They actually believe that zero-interest rates are the norm.
This all comes with the world in conflict on so many fronts.
It does not help that China’s economy is not as strong as in the past. You can only imagine what that will incite the Chinese leaders to do to keep their countrymen distracted.
It goes without saying that the Middle East is, as always, in turmoil.
Then you have Russia and its economic problems exacerbated by the war with Ukraine.
This list of global concerns is endless.
So where does that leave an investor with the indexes and averages at near-record highs.
In my case, I’m grateful, but anxious, as to what is the proper course of action.
Those who have asked me, I have told them to take some of the profits off the table and offset against any laggards.
You can still get over 4% on Treasuries.
Warren Buffet is more of a seller of late than a buyer.
Hoping that this market will only go up is fool’s gold.
Hopefully you were a risk taker over the last 12 months and bought on every dip.
Then again, you could have owned the Mag 7 this time last year and be up over 30%.
Not a bad year at all given all the distractions.
