When I last wrote, the first week of January, we had just experienced quite a fearsome correction. That correction is now being referred to as the Christmas Eve Massacre.
How poetic, and typical of the media.
Our indicators started showing defense quite a bit before that, and we were ready for it. As the new year began, the markets began to recover and the defensive measures we employed were removed.
As I write this today, all our indicators are showing positive and the positions we own are doing just fine. Over the years I have described our work as that of navigating a river. In December we hit some rapids, but no waterfall, and now the river is briskly moving along without a ripple in sight.
Well, that’s not exactly true, but close. The economy continues to move ahead with unemployment still at all-time lows, the danger now is interest rates.
You may have heard of what is called by economists the yield curve. Basically, the economy and markets work best when short term interest rates are lower than long term interest rates. Today, however, there just is not much difference between six-month rates and ten-year rates, a bit, but not a lot. This is referred to as “flattening of the yield curve”. The danger moving forward is short term rates equaling the longer term, or worse becoming higher. This is referred to as an “inverted yield curve” and can often lead to a recession.
This phenomenon will occupy the media talking heads but will not impact our decision making. I learned a long time ago that it simply does not pay to try to anticipate the markets. We have processes in place to tell us what is happening, and as that good old river shows itself, we will make the appropriate adjustments.
This is what we do. We don’t anticipate, we navigate.
Thank you for your continued Trust and Confidence.
Gregory G. Riggs, CFP
Accredited Investment Fiduciary
Securities and Advisory Services offered through KMS Financial Services, Inc. Member FINRA/ SIPC
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.