Market In A Snap! October 31st – November 4th, 2022

By: Jeff Anderson

 CloseWeekly returnYTD return
S&P 5003,770.55-3.35%-20.89%
Nasdaq Composite10,475.25-5.65%-33.04%
Russell 2,0001,799.87-2.55%-19.84%
Crude Oil$92.524.71%22.64%
US Treasury 10yr Yield4.167%  

Source: Wall St. Journal

Market Recap

As expected, the Federal Reserve raised interest rates another 75 basis points this past Wednesday.  As we’ve stated countless times in previous weekly updates and on our podcasts, it should not have come as a surprise.  Inflation needs to come down. Until it does (in a statistically meaningful way), nothing is going to change.  We should welcome some kind of normal interest rate environment anyway.  The zero-interest-rate-policy was a sugar rush for risk assets. It felt good but it wasn’t healthy.  We need a return on our money when we park it in a savings account. We need to be incentivized to save. Saving is good. A healthy economy relies on savings.  Banks lend those savings to people who want to borrow and invest in manufacturing and the service industry.  Printing money and offering no rate of return on it just promotes speculation.  That rampant money printing is hopefully of a bygone era. In the meantime, the Fed has to battle inflation.  8% is much too high but getting back down to 2% may be a tough target to reach in the short term.  Unemployment will have to rise.  The economy will continue to slow and possibly contract.  Runaway home prices will be another thing of the past.  Getting back to some kind of normal economy is hopefully in the cards.  It’s been so long that many of us don’t know what a normal economy looks like. 

Source: Google Images (Denis Tangney Jr / Getty Images)

Unless you are a diehard fan of baseball, willing to endure 162 games spanning the spring and summer months, fall ball is where its at.  There’s something about it that appeals to me and yet, I can’t quite put my finger on it. I loosely follow it during the summer, but when the pennant race is on it has my attention.  Maybe its seeing ball players act like kids again.  The enormous salaries become an afterthought.  It’s as thought they are back in their neighborhood makeshift baseball field dreaming of winning a world series with one swing of the bat.  Its great seeing everyone, players and fans alike, loving the chance to call themselves World Series Champions. 

As you have likely asked yourself with previous weekly updates, what does this have to do with investing!?  Well, truth be told, not much really.  Not directly anyway.  Like baseball, investing is a marathon, not a sprint.  Baseball owners hire general managers to run the team.  Every team has needs. Some need better pitching.  Some need a better short-stop.  The team needs to stay healthy and hopefully be able to compete down the stretch and earn a playoff spot.  Over 170 games are played, when you add in spring training, just to make it to the playoffs.  And from there, it becomes a bit of a sprint, where emotion, momentum, and some luck can get you to the world series.  That annual journey takes more than six months of dealing with injuries, trades, and weather that can cut your season short at any point. And, if it does, there’s always next year.  Teams are often building towards a run for a championship ring or dismantling their team and rebuilding for the future.  Everything about baseball is geared towards the long-term. Only during that fall push for a championship does all that long-term planning come to fruition.

Investing is similar.  You need a plan.  You need a long-term horizon. You’ll need some flexibility because things will change.   At times, reaching your goal may seem like its agonizingly far away. Eventually, it’ll be within reach.  So, like the long baseball season, enjoy the journey.  Isn’t life all about the journey anyway? We worry about the destination, but there isn’t a destination without a journey.

Advisory services are offered through Presidio Capital Management LLC, Registered Investment Advisers.  Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Presidio Capital Management, LLC unless a client service agreement is in place.

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