The Prudent Retiree - October 20, 2023
No Rock and Roll. Prudent Retiree is aghast at the tragedy in Israel. Barbaric, savage, evil. Words can only do so much to describe the horror. Hamas is evil. Those who would try to justify the atrocity with hollow arguments of colonization and occupation are deluded and complicit. President Biden was right to strongly condemn Hamas and their campaign of terror. Prudent Retiree stands unequivocally with Israel and the Jewish people. Never again.
Now to the markets. We would expect that this unfolding tragedy would unsettle global markets. Talks between Israel and Saudi Arabia about rapprochement are on hold. The leadership in Iran is celebrating. Hezbollah, another terror group funded by Iran, is threatening to attack Israel in solidarity with Hamas. Instead, the stock market has initially moved higher and the price of oil has moved slightly lower.
Overall market metrics are positive for the longer term. In the near term, metrics are slightly negative and we expect continued choppiness in a trading range. Two years ago, the S&P 500 was approximately 4800, an all time high. One year ago, the S&P 500 was about 3700, a bear market decline. Today, the S&P 500 stands at about 4370, a strong rally since last year. The market has been mainly driven by interest rate fluctuations caused by rising inflation and predictions of future inflation trends. Wars and rumors of war haven’t seemed to matter much.
No one knows how the wars in Israel and Ukraine will end. We don’t know if China sees this as an opportunity to invade Taiwan. Inflation has abated over the past year, but we can’t be sure it won’t take another turn up. The jobs market remains tight. Predictions are all over the map on who wins the next election. There is chaos in Congress and a looming crisis about financing our debt. Interest rates remain high and the result may be a recession. Happy days are not here again.
How should we respond? Listen to the market as always. The past two years have been tough and the only safe haven has been cash. We have relied on risk management to navigate this turbulence and your portfolios are positioned well. We continue to maintain our current allocations. Our goal as always is to avoid large losses from which you can’t recover. Expect continued volatility and don’t panic.
The Horseman Group – John, Bill, Renee and Dexter
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