Well so much for the lazy hazy days of summer.
We lost in the last seven trading days all the gains that the averages and indexes made in the month of July.
It appears this week will be no better and probably worse.
I had a friend that I consulted with call me Friday and ask if it was time to start buying.
Explained that I sold out an account for my daughter when the market topped out.
I told him it was only trying to capture profits at record highs into Treasuries at the highest level for the near term.
It was done not because of any insight on my part but to have cash available for her new business venture. Sometimes other factors come to help you when you least expect.
Analysts have attributed the unemployment report last Friday as a signal of an upcoming possible recession.
Many have jumped on the 150-basis point interest rate reduction by the Fed through the end of the year.
The prediction was more sanguine with previous projections at only 50 basis point reductions.
One needs to step back and look back just a year ago. The S&P 500 index was over 1000 points lower, and it started north until October.
We had another correction, and the index hasn’t looked back until the last week. You have to appreciate how much volatility has been built into trading today. We have so much trading occurring in short-term instruments like options that are leveraged.
My point is that when and if the mood of the market turns, it could get ugly quick.
There is the other problem that every pullback many investors jumped back in and bought and were rewarded. This is great until it isn’t.
For all that looked to crypto as an alternative to equities, well that hasn’t helped. Bitcoin climbed up to 70,00 only to fall back to 50,000 this week.
Maybe we are getting back to a little common sense in this market.
This whole AI craze has driven stocks far further than I was comfortable with recommending further investment.
We are seeing Microsoft and Amazon acknowledge the significant amount of capital spending required to achieve what these companies look to accomplish.
That is good news for Nvidia, but not for the rest.
It has been no winner for energy at the same time.
We have seen WTI dropping below $80 per barrel and natural gas fall below $2. You then have Israel attacking Hamas in Lebanon with a missile strike.
Now we shall see what Iran has to say about those measures.
The fight in Gaza is far from over and I haven’t even mentioned Ukraine.
We haven’t noted the impact of the election.
The real news is the potential economic slowdown.
It is just hard for me to think one unemployment report is that significant.
It is only so due to having gone far too far this year. There is something to be said for the market being overpriced.
I am not convinced that AI is near what it can be and I don’t feel the economy is that close to recession.
We are not having a credit crunch.
We are flat having far too many people running for the door at the same time.
I do not feel that it is a buying opportunity as it has been over the last year. Sometimes you have to let these things play out.
What may happen is that we may have a place at the table for value investors.
It has been a long five years since March of 2019 and the beginning of the pandemic.
I am not saying this is any fun to see the value of your retirement account drop.
Hopefully you have some cash and you might just get the chance to use it sooner than it appeared only a week or so ago.
Only time will tell about the economy.
You might want to keep watching the Olympics for another week or so to keep your mind off your investments.
It can’t always be good news all the time.
