The Prudent Retiree - What's Going On Part XVII
Like all of you, we were shocked and saddened by the killing of George Floyd. The continuing horror of the protests and riots leaves us shaken. Our responsibility is managing your money, so let’s discuss the market in the current context. Seemingly so much is out of kilter. How can the market go up?
1968. A pandemic, the Hong Kong flu, killed more than 100,000 Americans. (Population adjustment would make that count 165,000 today.) Martin Luther King and Robert Kennedy were assassinated. The country was torn apart by race related protests and burning cities. The Vietnam War took a turn for the worse and casualties mounted. President Johnson was so despised he chose not to run for re-election. The Democratic National Convention in Chicago turned into a combat zone between police and anti-war protestors. The SDS and the Weathermen, radical anarchist groups, infiltrated peaceful protests with the intent of agitating violence. Richard Nixon, who was loathed by the mainstream media, narrowly won a bitter Presidential election. George Wallace, the racist former Governor of Alabama, won 13% of the national vote and carried five states. “America: Love it or Leave it” bumper stickers proliferated.
1968 was a year of unrest and uncertainty. The stock market declined in the first quarter of the year, but ended the year up almost 8%. That gives one pause, but helps to explain the market today. Never confuse politics with investments. Never think it’s never happened before. The market is not on anyone’s side. The market performs based on it’s perception of the economy and the future.
What will the market do in 2020? No one knows. We just know that you can’t correlate what you are seeing, hearing and reading directly to the market. 1968 should make that clear.
There are significant potential risks in the economy. There are grave issues and uncertainty. The market is volatile. At this moment, the market is indicating that it is moving higher. Stay allocated as you are. 2020 will be one for the history books like 1968.
That’s what is going on.
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